Accumulate Siemens Energy India Ltd For Target Rs.3,566 by Prabhudas Liladhar Capital Ltd
Robust quarter; all eyes on HVDC award
Quick Pointers:
* EBITDA margin was slightly impacted by higher share of project business in the revenue mix.
* Q4SY25 order intake remained flattish YoY at Rs23.5bn due to advancement of orders into Q3SY25.
We revise our SY26/SY27E EPS estimates upward by 3.9%/6.1%, reflecting stronger-than-anticipated order intake momentum likely in Power T&D, and upgrade our rating on the stock from ‘Hold’ to ‘Accumulate’ following the recent correction in its price. Siemens Energy India (ENRIN) delivered a robust quarter, with revenue rising 27% YoY to Rs26.5bn, although EBITDA margin contracted by 40bps YoY to 18.1% due to a higher share of project revenues. Growth was led by the Power Transmission segment (+48% YoY) which accounted for ~51% of quarter’s revenue mix, while the Power Generation segment posted a moderate 11% YoY increase. Order intake was broadly stable, owing to the advancement of major order finalizations into the previous quarter. ENRIN’s medium-term outlook remains strong, supported by a robust order book position and strong prospects including a VSC HVDC project (Khavda–South Olpad). Furthermore, the upcoming operationalization of its power transformer capacity expansion, alongside phased capacity additions across other key transmission products through SY26 and SY27 and launch of Industrial Steam Turbine service center in Raipur, should meaningfully strengthen the company’s volume trajectory. The stock is currently trading at a PE of 80.1x/62.1x on SY26/27E. We value the company at a PE of 70x Sep’27E (same as earlier) arriving at a TP of Rs3,566 (Rs3,360 earlier). Upgrade to ‘Accumulate’.
We believe ENRIN is well-placed to capitalize on the robust multi-year energy transition and energy efficiency opportunity given 1) 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, and 5) ongoing capacity and capability expansion of key transmission equipment manufacturing including doubling of capacity for power transformers.
Strong growth driven by robust Power Transmission segment growth: Revenue increased by 27.3% YoY to Rs26.5bn (PLe: Rs27.4bn) was driven by 47.9% YoY growth in Power Transmission segment to Rs13.6bn while Power Generation segment grew by 10.9% YoY to Rs12.9bn. Gross margin expanded by 96bps YoY to 35.6%. EBITDA grew by 24.5% YoY to Rs4.8bn (PLe: Rs5.0bn) while EBITDA margin contracted by 40bps YoY to 18.1% primarily on account of higher share of project business in the revenue mix. Power Transmission segment EBIT margin expanded by 205bps YoY to 18.1% while Power Generation segment EBIT margin contracted by 315bps YoY to 15.6%. PBT increased by 30.8% YoY to Rs4.8bn (PLe: Rs4.8bn) aided by significant jump in other income (Rs368mn vs Rs20mn in Q4SY24). PAT increased by 31.4% YoY to Rs3.6bn (PLe: Rs3.7bn) aided by lower effective tax rate (24.8% vs 25.2% in Q4SY24).
Order Book stands strong at Rs162.1bn: Q4SY25 order intake remained flattish YoY at Rs23.5bn due to advancement of orders into Q3SY25. Order Book stands strong at Rs162.1bn up 47.0% YoY (2.1x TTM revenue).
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