Jefferies, an international brokerage house, maintained its ‘Buy’ rating on the demerged entity Siemens Energy India to cash on India’s largest power equipment player by market capitalisation. The brokerage house has a target price of Rs 3,500, implying an upside of 21%.
The global broker expects the company to see a 50% EPS CAGR between September 2024-27, which it estimates to be driven by the robust power capex pipeline and operating leverage-linked margin accretion.
Jefferies on Siemens Energy: Target price at discount to peers
The brokerage’s target price of Rs 3,500 values Siemens Energy at a price to earnings (PE) ratio of 65x March FY27, which is a 5% discount to its peer Hitachi Energy. Hitachi and GE Vernova T&D (transmission and distribution) are comparable to Siemens Energy and are trading at a PE ratio of 68x and 55x.
“GE has seen 78% YoY export order flow growth in FY25, which is a key driver ahead, unlike for Siemens Energy. Exports have come into question given the US President Trump’s tariff policy uncertainty,” said Jefferies.
Jefferies on Siemens Energy: Power capex to increase twice
Siemens Energy is incurring a capital expenditure of Rs 460 crore to double its power transformer capacity and add large reactors to its portfolio by December 2025. Post demerger, the company will be 100% focused on the energy business and a key beneficiary of the over $100 billion transmission capex pipeline.
The energy company’s revenues are expected to rise at a 34% CAGR in Q3 FY24-27. “We expect power capex to rise 2.2x to $280 billion over FY25-30 as against FY18-24, implying 21% CAGR. The company was awarded Rs 1.5 lakh crore transmission bids in FY25 compared with Rs 39,500 crore in FY24, i.e 4x,” said Jefferies.
Jefferies on Siemens Energy: Operating leverage should drive margin expansion
The company’s current margins reflect less than 60% utilisation at its T&D facilities. The order book rose 55% YoY to Rs 15,100 crore in March 2025, which provides strong revenue visibility going ahead. Employee costs and fixed overheads (approximately 40% of other expenses) make 17% of revenues in September 2024, which should rise at a 12-17% CAGR.
This should drive sharp operating leverage as these fixed expenses decline by 500-600 basis points to 11-12% of sales in September 27. Gross margin expansion will add to margin upside.
All in all, a comprehensive energy portfolio backed by technology from its global parent should drive an uptick in the company’s market share going forward, added Jefferies. Siemens Energy is India’s largest power equipment player by market cap at $12 billion compared with GE and Hitachi at $7-10 billion. It offers solutions for power transmission, generation and industrials from 8 factories in India.