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Pipeline building up

Our recent interaction with Siemens Energy (ENRIN) suggests that ordering is gradually ramping up in the transmission sector, and long-term demand from grid strengthening, grid flexibilization and data center remains strong. The demand-supply situation is still favorable in transmission segment, implying margin sustainability. The company is also witnessing healthy export demand for transformers, switchgears for power transmission segment and services for power generation segment. We cut our estimates by 5%/2% for FY27/28 to align with the capacity commissioning schedule of new facilities and maintain BUY with a revised TP of INR4,000, based on 55x Sep’28E earnings (vs. INR4,100 earlier).

Power transmission to remain a key growth driver

Power transmission revenue/order book grew 34%/28% YoY in 9MFY26. Order inflow for power transmission segment for FY24/FY25/9MFY26 stood at INR48b/INR84b/INR67b and we expect it to clock a CAGR of 13% over FY25-28. With the current order backlog of INR135b and upcoming order inflows from STATCOM, transmission, data centers and exports, we see a strong visibility on revenue growth. The company mentioned that demand for transformers and switchgears remains strong owing to the renewable capacity target of 900GW by FY36. ENRIN is seeing demand from

1) STATCOM-related orders, which were weak till 2QFY26

2) TBCB tenders, as pipeline has started improving from Jul’26

3) Data center-related requirements for 220kV/440kV range

4) improving prospects in exports for transformers and switchgears. The company also benefits from global project allocations from its parent entity. We tweak our estimates for FY27/28 to align with the capacity commissioning schedule of new facilities and expect a revenue CAGR of 35% over FY25-28 with EBIT margin of 21%/22%/22% for FY26/27/28.

Power generation to grow at a steady rate of 10% annually

Power generation revenue grew 28% in 9MFY26. Order inflow for power generation segment for FY24/FY25/ 9MFY26 stood at INR40b/INR47b/INR33b and we expect it to post a CAGR of 7% over FY25-28. Power generation has a diversified customer base and caters to manufacturing of industrial steam turbines (up to 250MW), refurbishment and repair of larger steam turbines, gas turbine services, long-term service agreements and ER&D. While the company does not manufacture gas turbines or larger steam turbines in India, it focuses on servicing and refurbishment of the large installed base. The company’s ER&D team has expanded to 1,500 members in Gurgaon from ~500 three years ago and caters to global projects across gas turbines and other technologies. We expect steam turbine demand to grow steadily by 9-10% annually, supported by industrial growth and decarbonization initiatives, as well as gas turbine demand to be catered mainly via services from ENRIN. During 9MFY26, the share of services and ER&D was relatively higher, which boosted EBIT margin by 450bp YoY in power generation segment. We expect this segment’s revenue to record a 10% CAGR over FY25-28, with margin of 21%/18%/18% for FY26/FY27/FY28.

Capacity expansion in view of strong multi-year demand

Over the last one year, ENRIN has announced multiple capacity expansion plans totaling ~INR28b. The first expansion plan, worth INR7.4b, is aimed at doubling Kalwa unit’s transformer manufacturing capacity from 15,000 MVA to 30,000 MVA and expanding high-voltage switchgear capacity in Sambhajinagar, which would be commissioned in a phased manner over FY26 to FY28. The new greenfield capacity expansion, worth INR20.6b, will increase transformer manufacturing capacity further from 30,000 MVA to 60,000 MVA, which is expected to be commissioned over FY30-32.

Financial outlook

We cut our estimates by 5%/2% for FY27/28 to align with the capacity commissioning schedule of new facilities. We expect revenue/EBITDA/PAT CAGR of 25%/31%/33% over FY25-28E, led by strong growth across power transmission (35% CAGR) and power generation (10% CAGR). We expect EBITDA margins of 22.5%/ 22.0%/22.4% for FY26E/FY27E/FY28E.

Valuation and view

ENRIN is currently trading at 68.8x/53.8x/42.8x P/E on FY26E/27E/28E EPS. We maintain BUY with a revised TP of INR4,000 (earlier INR4,100), based on 55x Sep’28E earnings.

Key risks and concerns

Key risks to our thesis can come from a slowdown in ordering and adverse margin impact from supply chain issues and a sharp rise in commodity prices.

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