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Strong Q3; Execution momentum accelerates

We revise our SY27E/SY28E EPS estimates by +5.7%/+4.2%, factoring in a stronger than expected execution and improving operating leverage aided by favourable revenue mix. Siemens Energy India (ENRIN) reported a strong performance with revenue growing ~39.3% YoY, while EBITDA margin expanded 450bps YoY to 23.6%, driven by robust operating leverage, favourable export mix and improved project execution. Growth was led by the Power Transmission segment (+42% YoY), supported by accelerated execution of its healthy order backlog, strong export demand and margin expansion, while the Power Generation segment (+36% YoY) likely benefited from an improving services mix and healthy demand for steam turbines across domestic and international markets. Order inflow increased by +3% YoY against a higher base, taking the order book to a record ~INR193.3bn (+16% YoY), providing strong multi-year revenue visibility. The long-term growth outlook remains compelling, supported by the INR20.6bn capacity expansion to add ~30,000 MVA transformer capacity, Kalwa facility expansion (to be operational by Q2CY27), localisation across key transmission products, rising investments in grid modernisation, renewables and increasing opportunities in data centres and nuclear power. We maintain our ‘Accumulate’ rating valuing stock at a PE of 55x Mar’28E (same as earlier) arriving at a revised TP of INR3,434 (INR3,274 earlier).

Long term view:

We believe ENRIN is well-placed to capitalize on the robust multi-year energy transition and energy efficiency opportunity given

I) it being among the only 3 players in India having HVDC capabilities

2) its market leading position in product sale and upgradation of industrial steam turbines (up to 250 MW)

3) robust opportunities in energy and utility-scale gas services in India

4) its comprehensive portfolio catering to the decarbonization space

5) ongoing capacity and capability expansion of key transmission equipment manufacturing including power transformers. The stock is currently trading at PE of 58.1x/47.1x on SY27E/SY28E.

Higher export mix aided margins:

Revenue increased by 39.3% YoY to INR 24.9bn (PLe: INR 22.3bn) driven by 42% YoY growth in Power Generation segment to INR 13.9bn while Power Transmission segment grew by 36% YoY to ~INR 11bn. Gross margin expanded by 339bps YoY to 45.1%. EBITDA grew by 72.1% YoY to INR 5.9bn (PLe: INR 4.6bn) while EBITDA margin expanded by 450bps YoY to 23.6% driven by better operating leverage and higher export contributions. Adj. PAT increased by 67.8% YoY to INR 4.4bn (PLe: INR 3.5bn) aided by better operating performance.

Order book stands strong at INR193.3bn (+16.4% YoY):

Order intake (calculated) increased by ~3% YoY to INR 33.8bn while order book stands at INR 193.3bn (+16.4% YoY) (2.0x TTM Sales). Power Transmission segment order book stands at ~INR 134.9bn while Power Generation order book stood at ~INR 58.4bn at the end of Q3SY26

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