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Kolkata: The core competence of Siemens Energy India spans the manufacture of power transformers, constructing substations, and developing solutions for power and heat generation and transmission. Significantly, it is a technology-heavy company that is active across the entire energy value chain -- generation to transmission and industrial energy management.
A lot is happening around the energy sector in India -- both thermal and renewable. Major Indian brokerage Motilal Oswal has maintained a bullish stance on Siemens Energy India. The trigger is a huge demand in improving the power transmission network and industry-wide capital expenditure from the private sector going on. Siemens is a giant in this sector. “We expect the company to benefit from a strong opportunity in the power transmission segment,” said Motilal Oswal in its report.
The Siemens Energy India stock price around 11 am on Nov 27 was Rs 3,105.00, down Rs 8.70 or 0.28%. Motilal Oswal has assigned Rs 3,800 as the target price for this stock. Therefore, it signals a 22% upside from the current levels. The brokerage has justified its optimism by expectations of strong demand in India’s power transmission network and ongoing industry-wide capital expenditure.
Siemens Energy India posted strong operating performance in Q4FY25, when revenue went up to Rs 2,600 crore, which marked 27% year-on-year jump riding on a strong pick-up in activity in the power transmission sector. As the activity rises in power transmission, the core business of the company appears steady since the company's business is linked to the high-voltage transmission network expansion in the country. The order book of Siemens also added to this momentum.
India is an energy-hungry economy and is expanding both the traditional and renewable power sectors. The country is pushing for an investment cycle in its electricity network and reports state that about Rs 3 lakh crore investment can flow into the transmission and distribution network between FY25 and FY30. A large part of this amount can be targeted towards boosting the 400 kilovolt (kv) and 765 kv high-voltage network. Siemens Energy India is one of the few capable of work in 765kv systems. There is also vigourous activity at the state level and measures such as strengthening intra-state transmission networks could throw open Rs 12,000 crore worth of business.
The brokerage thinks revenue, and EBITDA could generate a significant pace of growth until FY27. “We expect revenue, EBITDA (earnings before interest, tax, depreciation and amortisation) and PAT (profit after tax) CAGR of 30%, 39% and 41% over FY25-27,” said Motilal Oswal in its note, adding "we expect EBITDA margins of 21.1% and 21.8% for FY26 and FY27.” Much of the new business is expected to come from transmission. Motilal Oswal thinks the rise in this sector's revenue can be as high as 43% CAGR (compound annual growth rate). On the other hand, the power generation business can account for a much humbler 15% CAGR.
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