Siemens order book grows as commodity and currency pressures weaken margins

Investment View and Q1 FY27 Summary

Motilal Oswal Financial Services Ltd. (MOFSL) reviewed Siemens on August 11, 2026, following its Q1 FY27 results. The broker characterised the performance as mixed: revenue was broadly in line with expectations, but profitability missed because of lower margins.

MOFSL retained its Neutral rating and raised its target price to Rs 3,600 from Rs 3,500. The target implies 10 per cent downside to the report CMP of Rs 4,011.

The EBITDA margin was below expectations principally because other expenses were higher than expected. Adjusted PAT also missed the estimate, as Smart Infrastructure margins were weaker than anticipated. Siemens additionally recorded approximately Rs 18 billion, adjusted for tax, from the sale of its LVM business as an exceptional gain.

Order Inflows and Order Book Strength

Order intake was a positive feature of the quarter. Q1 FY27 order inflow rose 16.5 per cent year on year to Rs 63.3 billion, or 43.9 per cent excluding a large Mobility order in the comparable quarter. The closing order book stood at Rs 467 billion as of June 2026, up 10 per cent year on year.

Order growth was supported by automation orders, grid modernisation, data centres, commercial real estate and rolling stock. Digital Industries won automation-solution orders for solar-cell manufacturing and from the metals, electronics, pharmaceuticals and water markets. Smart Infrastructure benefited from grid-modernisation, data-centre and commercial-real-estate projects, while Mobility saw healthy rolling-stock demand.

Segment Performance and Margin Trends

Segment revenue was broadly in line with MOFSL estimates, except for Digital Industries, which was 12 per cent above estimates. Profitability was affected by commodity-price volatility, foreign-exchange movements and higher material costs. Adjusted for the Mobility one-off gain, EBIT margins across all segments were in single digits.

Business Outlook

Smart Infrastructure

MOFSL expects Smart Infrastructure to benefit from spending on power transmission and distribution, grid automation, data centres, e-mobility and industrial infrastructure. The broker expects margins to recover when commodity pressures ease.

Mobility

Locomotive deliveries have commenced and should ramp up progressively. Price-escalation clauses are expected to protect Mobility margins from commodity inflation.

Digital Industries

Digital Industries order inflows have begun to improve and margins have recovered sequentially. However, MOFSL expects margins to remain subdued because of limited localisation and high semiconductor input costs. A recovery in private-sector demand could improve Digital Industries inflow and execution.

Estimates, Valuation and Target Price

MOFSL cut its FY27 and FY28 adjusted PAT estimates by 8 per cent and 2 per cent, respectively, to reflect the impact of commodity and currency effects on margins.

The stock traded at 74.9 times FY27E, 56.5 times FY28E and 47.3 times FY29E EPS. MOFSL retained its Neutral recommendation despite the higher target price.

Key Risks

• Slower order inflows from government-focused segments.
• Aggressive bidding for large projects, which could damage margins.
• Related-party transactions with parent-group entities at below-market valuations.