Siemens Shares Up 4% After Robust Results, Energy Business Spin-Off: Brokerages Raise Target Price

Siemens India shares jumped 4% in the early morning session on Wednesday after the company posted strong results in the March quarter.

What Happened: The company's net profit increased by 70% to ₹802.5 crore in the second quarter. Siemens India follows an October-September financial year. The firm's revenue gained by 18.4% to ₹5,749.9 crore in the quarter.

The company's board also announced a demerger of its energy business into a separate entity. The energy business will operate as Siemens Energy India. Shareholders will get one share of Siemens Energy India for holding one share of Siemens India. Order Inflows stood at ₹5,180 crore in the quarter and its total order book was at ₹46,200 crore.

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Brokerage Views: Motilal Oswal maintained their "buy" rating and increased the target price to ₹7,800. The brokerage said the company is a direct play on the transmission and High-voltage direct current (HVDC) related spending.

The analysts expect a compound annual growth rate of 20%, 29% and 30% in revenue, EBITDA and profit after tax, respectively, over FY23-FY26 as the company will be the beneficiary of investments in railways, transmission and distribution, data centres and industrial activity. Siemens' results were ahead of the brokerage’s expectations, helped by strong margin performance and higher other income.

Nuvama Institutional Equities also raised the target price to ₹7,700 and reiterated its "buy" call betting on chunky order inflows from railways and HVDC in FY25E added with better operating led high margins. The company's high-mid-teen operating margins are sustainable due to operating leverage, pricing benefit and cost efficiencies.

Jefferies also maintained their "buy" call and raised the target price to ₹8,000 as it sees the demerger of the energy division unlocking value for the company. The ₹1,000 crore-plus capex earmarked by the company also shows management's confidence in the company's growth.

Price Action: Siemens India shares shot up by 4% to ₹6,934.95 in the morning session on Wednesday.

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