Siemens sees record order backlog, but margin recovery remains the key monitorable
Siemens Ltd.
HOLD
₹4,030
₹4,034.7
₹4,150
2.98%
Investment View and Valuation
ICICI Direct Research retains a HOLD recommendation on Siemens Ltd. with a target price of Rs 4,150 versus a CMP of Rs 4,030. The target price is based on 60 times FY28E EPS, with a 12-month target period.
The broker sees a favourable structural demand backdrop across electrification, automation, mobility and infrastructure. However, margin recovery remains the principal near-term monitorable, particularly in Smart Infrastructure and Digital Industries. The report was published by ICICI Direct Research on August 13, 2026, and was prepared by Chirag J Shah, Dilip Pandey and Gourav Aggarwal.
Siemens is considered well positioned to benefit from the automation and digitisation of industries. Strong backlog and structural capital expenditure demand provide medium-term growth visibility, but the normalisation of margins may take time and limit near-term earnings upside.
Business Mix
Siemens operates primarily through Smart Infrastructure, Digital Industries and Mobility, with Smart Infrastructure contributing the largest share of revenue.
| Business segment | Share of revenue |
|---|---|
| Smart Infrastructure | About 56% |
| Digital Industries | About 23% |
| Mobility | About 19% |
| Other businesses | About 2% |
Q1FY27 Financial Performance
Siemens reported mixed consolidated results for Q1FY27. Revenue grew strongly, but profitability declined as commodity-price volatility, higher material costs, foreign-exchange movements and depreciation of the rupee against the euro weighed on margins.
| Metric | Q1FY27 | Year-on-year change | Q1FY26 / prior period |
|---|---|---|---|
| Revenue | Rs 4,714 crore | Up 14.8% | — |
| EBITDA | Rs 431 crore | Down 16.7% | — |
| EBITDA margin | 9.1% | Down 340 bps | 12.6% |
| PAT from continuing operations | Rs 343 crore | Down 18.7% | — |
| Net profit margin | 7.3% | — | 10.3% |
Segment Performance
Revenue growth was recorded across the key segments, but Smart Infrastructure and Digital Industries experienced significant EBIT and margin pressure. Mobility delivered a sharp improvement, although its EBIT performance included a one-time gain of Rs 39 crore.
| Segment | Revenue | Revenue growth | EBIT | EBIT growth | EBIT margin | Prior margin |
|---|---|---|---|---|---|---|
| Smart Infrastructure | Rs 2,633 crore | Up 10.7% | Rs 201 crore | Down 37.0% | 7.6% | 13.4% |
| Digital Industries | Rs 1,144 crore | Up 24.9% | Rs 59 crore | Down 40.3% | 5.1% | 10.8% |
| Mobility | Rs 933 crore | Up 12.8% | Rs 95 crore | Up 199% | 10.2% | 3.8% |
Order Momentum and Execution Visibility
Order momentum remains the central positive for Siemens. Q1FY27 new orders increased 16.5% year-on-year to Rs 6,328 crore despite a high base that included a large Mumbai–Ahmedabad High-Speed Rail signalling order. Excluding this base order, underlying order growth was approximately 44% year-on-year.
The order backlog reached a record Rs 46,670 crore, up 9.6% year-on-year, supporting execution visibility. ICICI Direct expects FY27E order inflows of more than Rs 27,000 crore to Rs 30,000 crore. The broker also expects the ramp-up of the large railway locomotive order to support revenue growth.
Broker Estimates
ICICI Direct’s estimates point to a recovery in earnings and margins through FY28E, supported by revenue growth and anticipated margin normalisation.
| Metric | FY27E | FY28E |
|---|---|---|
| Net sales | Rs 22,231 crore | Rs 25,777 crore |
| EBITDA | Rs 2,201 crore | Rs 2,810 crore |
| Adjusted PAT | Rs 1,945 crore | Rs 2,461 crore |
| EPS | Rs 54.6 | Rs 69.1 |
Key Risks
- A slowdown in domestic or global capital expenditure could affect order inflows, revenue growth and execution.
- Higher commodity prices could further pressure material costs and margins.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
