ADVERTISEMENT

Siemens Shares Jump Over 12% In Four Sessions As Analysts Bet On Growth

Here's what brokerages have to say about the company...

<div class="paragraphs"><p>A Siemens AG SP200D electric engine sits on display. (Photographer: Jason Alden/Bloomberg)</p></div>
A Siemens AG SP200D electric engine sits on display. (Photographer: Jason Alden/Bloomberg)

Shares of Siemens Ltd. increased more than 12% in the past four sessions as brokerages turned optimistic on the automation company, citing improved volumes, better margin and digitisation efforts, among others.

The stock rose nearly 8% on Friday, the most in nearly seven months. That's the fourth straight session of gains.

Siemens Shares Jump Over 12% In Four Sessions As Analysts Bet On Growth

The trading volume was 9.3 times the 30-day average volume on Friday. Of the 29 analysts tracking the company, 15 maintain a 'buy', seven recommend a 'hold' and seven suggest a 'sell', according to Bloomberg data. The 12-month consensus price target implies a downside of 7.1%.

Siemens Shares Jump Over 12% In Four Sessions As Analysts Bet On Growth

Here's what brokerages have to say about the company...

Equirus Securities

  • Upgrades to 'add' from 'reduce', hikes target price to Rs 2,280 from Rs 2,040, an implied upside of 5%.

  • Posted fourth straight quarter of strong volume performance in Q4.

  • Expects company to deliver Ebitda margin of 12.5%/12.9% in FY23E/FY24E, despite the impact due to commodity inflation and tight supply chain.

  • High localisation, value addition in automation and digitalisation to drive margin.

  • Marginally increase earnings per share estimates to factor in resilient volume and margin performance in a challenging environment.

  • Order inflows across segments remain encouraging.

  • Economic revival and rising capex spends to aid demand.

  • Building automation, e-charging infrastructure, pharma, F&B and automotive segments to be key growth drivers.

Nomura

  • Upgrades to 'buy' from 'neutral', raises target price to Rs 2,555 from Rs 2,355—an implied return of 17.17%.

  • Improved outlook and potential for Ebitda margin expansion due to the rise in share of services are major reasons for the upgrade.

  • Rising digital spends to power service expansion.

  • Combination of PLI, renewable energy integration, energy efficiency, demand of captive power, digital and automation solutions to drive strong growth in FY22 and beyond.

  • Digitalisation efforts by the company would receive a massive boost with the advent of 5G.

  • Expects edge technology adoption to accelerate after the 5G rollout.

  • Increases EPS estimates by 3%/4% for FY22F/23F to account for higher order inflows and sales.

  • Company score highly on environmental, social, and governance metrics and its offerings help achieve energy efficiency and optimise the use of resources.

Key Risks

  • Further rise in commodity prices.

  • Muted private capex and slower-than-estimated adoption of automation and digitalisation by Indian industries.

Motilal Oswal

  • Maintains 'neutral' with a price target of Rs 2,065—a downside of 6%.

  • Company's performance in building segment was resilient, while ordering activity declined for the industry.

  • Rise in capacity levels could lead to newer capex.

  • Order inflows remained robust, led by short cycle orders resulted in revenue growth.

  • Healthy order inflow in services segment augurs well for the company.

  • Quick adoption of digital and automation technologies to aid demand for key digital offerings like operational technology cybersecurity solutions, industrial edge, internet of things solutions, etc.

  • C&S Electric integration remains on track, with exports being the key thesis. The company has already commenced exports to South Asia.

  • Expects margins to be on an uptrend over a three-five-year period.

Edelweiss Capital

  • Maintains 'buy' with a target price of Rs 2,660, an implied return of 21.69%.

  • Ordering cycle has improved consistently over the past few quarters driven by short-mid cycle product orders from cement-metals, food-beverages and renewables.

  • Utilisation at 70% implied that large-scale greenfield capex is still some time away.

  • Remains bullish due to uptick in automation, digital and medium voltage solutions.

  • Expects the growth cycle for Siemens in the medium-long run to be far better as the economic cycle revives gradually.

  • Company already witnessed improving traction in data centres, electric vehicle charging segments.

Jefferies

  • Maintains ‘buy’ but cuts target price to Rs 2,560 from Rs 2,670, still an upside of 17.12%.

  • The central government's infrastructure spend rising and private sector uptick augurs well for the company.

  • Lowers FY22E-23E EPS by 2-4% to factor the margin impact on Q4 due to the impact of commodity/logistics costs.

  • Data centre spend should rise to $1-1.8 billion annually over three-five years.

  • Several signs indicating that the margin normalisation is ahead for the company; management optimistic of clocking higher margins over the next three-five years driven by market consolidation.

  • Acquisition of C&S Electric, completed in March has the potential to surprise on the upside.

  • Exercise of product branding for C&S Electric already underway; cost synergies in the acquisition could add to profits over the next two-three years.