Equirus Securities has initiated coverage on Siemens Energy India with a Reduce rating and target price of ₹2,695, citing stretched valuations despite the company's strong strategic positioning in India's energy transition. The brokerage acknowledges the company's robust fundamentals but believes current valuations already reflect much of the growth potential.

Strong Financial Performance in FY25

Financial year 2025 marked a breakthrough year for Siemens Energy India following its carve-out from Siemens Ltd. The company delivered impressive financial metrics that underscore its strong market position.

The strong order backlog provides robust medium-term revenue visibility, positioning the company well for sustained growth. Equirus forecasts a compound annual growth rate of 21% in both sales and EBITDA over FY25 to FY28, driven by structural tailwinds in the power sector.

Power Transmission Emerges as Growth Engine

The Power Transmission segment has become Siemens Energy India's primary growth driver, demonstrating exceptional performance across key metrics. The segment's dominance reflects the company's strategic positioning in India's renewable energy integration and grid modernisation efforts.

The segment's strong performance is supported by operating leverage, firm pricing, favourable export mix, and leadership in complex projects. While transmission ordering is expected to normalise after the strong FY25 performance, pricing is likely to remain stable as demand continues to exceed capacity additions.

Ongoing capacity expansions at Kalwa, Aurangabad, and Goa are expected to support a robust 29% CAGR in both sales and EBITDA for this segment over FY25 to FY28.

Diversified Business Portfolio

Siemens Energy India operates across multiple segments, providing diversification and stability to its revenue streams. The Power Generation business contributes 46% of FY25 revenues with EBITDA margins of around 18.00%, underpinned by a large installed base of gas and steam turbines.

In the high-voltage direct current (HVDC) segment, growth opportunities remain selective. The company maintains capabilities in line-commutated converter technology for long-distance bulk power transfer, while addressing localisation requirements through domestic manufacturing and local execution. The HVDC pipeline remains steady with one to two LCC project awards expected annually.

Valuation Concerns Despite Strong Fundamentals

Despite acknowledging the company's strong positioning to benefit from structural drivers in the power sector, Equirus maintains a cautious stance on valuation. The brokerage has valued the stock at 50 times March 2028 earnings, in line with peers, but believes current prices already reflect the growth potential.

Key structural drivers supporting the company include large-scale renewable energy integration requiring grid stabilisation, renewed transmission capital expenditure cycle, and gradual recovery in industrial demand. These factors are expected to provide multi-year growth visibility across Siemens Energy India's core businesses, though the brokerage suggests much of this positive outlook is already incorporated in current market pricing.

Jefferies has maintained its bullish stance on Siemens Energy, reaffirming its 'Buy' recommendation with a price target of ₹4,000.00. This rating continuation demonstrates the brokerage firm's sustained confidence in the company's investment appeal.

Analyst Recommendation Details

The following table summarizes Jefferies' current position on Siemens Energy:

Investment Outlook

By maintaining the 'Buy' rating, Jefferies signals its belief that Siemens Energy continues to present attractive investment opportunities. The ₹4,000.00 price target suggests the brokerage sees potential upside in the stock from current market levels.

The decision to maintain rather than upgrade or downgrade the rating indicates stability in Jefferies' assessment of the company's fundamentals and market position. This consistent recommendation reflects the analyst's view that the original investment thesis for Siemens Energy remains intact.