Siemens India shares have gained over 9 percent so far this month with the stock climbing sharply after the company emerged as the lowest bidder for a project for manufacturing 1,200 electric locomotive of 9000 HP (horsepower) worth over ₹20,000 crore at Dahod in Gujarat.
After hitting a 52-week low of ₹2,150.1 apiece on May 9 this year, the engineering firm's stock gained significantly to touch an all-time high of ₹3,138.50 on September 15. YTD, the stock is up 28.24 percent.
Siemens is a large-cap stock with a market capitalisation of ₹1,07,847.1 crore. The company manufactures and sells electric motors, generators, transformers, electricity distribution and control apparatus, general-purpose machinery, and other electrical equipment in India and internationally.
The company is a 75 percent subsidiary of Siemens AG, Germany, which has a presence in more than 200 countries.
Despite such strong gains in the current year so far, domestic brokerage firm ICICI Securities has a "buy" call on the stock with a target price of ₹3,630/share, an upside potential of 19.92 percent from the stock's previous closing price.
The brokerage outlined three key triggers for the stock's future performance, including a strong focus on technology leadership in digitisation and automation products that will further strengthen the company's market share.
It goes on to say that strong demand for short-cycle products with clear traction from the steel, cement, chemical, pharmaceutical, and fertiliser industries will drive strong growth and margin expansion in the smart infrastructure and digital industries segments.
The brokerage expects revenue and EBITDA to grow at a CAGR of 18 percent and 18.6 percent, respectively, in FY22–24E, owing to strong traction in short-cycle products and services.
"The order opportunity pipeline stayed healthy as Siemens continued to see an increased pace of tendering for Capex by both public and private sectors," ICICI said.
The brokerage said that during FY22, the company launched its Xcelerator programme, which is a comprehensive, curated portfolio that includes digital and IoT-enabled technologies.
The company is working on evolving a marketplace that enables education, exploration, exchange, and transaction within a community of customers, partners, and experts' offerings, it added.
However, global headwinds, including geopolitical tensions, high inflation, rising interest rates, and supply chain constraints will continue to remain key risks going forward, the brokerage pointed out.
The company's FY22 revenues were slightly impacted by supply chain challenges, a semiconductor shortage, logistic delay, and shipment delays.
For the fourth quarter of the financial year 2022 which ended on September 30, Siemens reported an 11 percent YoY rise in its revenue from continuing operations at ₹4,237 crore. The company's fiscal year runs from October to September.
During the quarter, the company's net profit from continuing operations increased by 23 percent to ₹392 crore.
For the financial year 2022, Siemens reported an increase of 43 percent in new orders, 18 percent in revenue, and 20 percent in profit after tax, the company said in an earnings statement.
25 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
