Siemens share price today is Rs 1851.5, up Rs 7 or 0.4%. Siemens performance over the week has seen it move from 1790 to Rs 1850, upmove of over 3% or more than Rs 60. With this in focus, ICIC Securities took a look at at the company itself and how its stock is likely to perform. Siemens is a leader in technology solutions for smart, intelligent, sustainable cities, building technologies, mobility and power transmission & distribution (T&D). 

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Digital industries, smart infra, mobility to drive future growth for Siemens:

ICICI Securities says Siemens is well placed to gain from the overall energy market transformation from electrification to automation & digitisation across the energy & industrial value chain. 

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ICICI Securities says that digital industries (process, discrete) segment would benefit from expected revival of manufacturing capex driven by PLI scheme, from better demand for retrofit and modernisation in the industrials. Mobility would be driven by capex in railway modernisation, high speed rail, metro rail. Overall, ICICI Securities says Siemen’s growth will be driven by digital industries, mobility, smart infrastructure, which are expected to grow at 17%, 13%, 17% CAGR, respectively, in FY21E-23E.

Segment mix, operational efficiencies to drive superior margins for Siemens:

ICICI Sec says that Siemens has continued to focus on profits over revenue by range of rationalisation and enrichment efforts for product mix to enhance market share, operating margins and gain competitive advantage across key segments. EBIT margins have expanded in FY17-19 and are expected to further improve in the next two years from 9.9% in FY19 to 10.3% in FY23E.

Siemens Valuation & Outlook:

ICICI Securities says that overall, the company is expected to further strengthen its leadership position through further penetration of automation and digitisation products & services across segments and that this will drive growth.

ICICI Securities says Siemens currently commands addressable revenue market share (digital industries, smart infrastructure, mobility, etc) of 15% in India being leader in the industry. 

Further, Siemens is currently trading at 42x P/E on FY23E (vs. forward median P/E band of 44x, up cycle and down cycle average TTM P/E of 25x and 80x, respectively). 

ICICI Securities says it values Siemens at Rs 2210/share with a BUY rating, implying multiple of 49x on FY23E EPS for core business and adding recently acquired C&S business valuing at 1.7x on FY23E sales.