ICICI Securities Limited has upgraded Siemens Ltd to a BUY recommendation from HOLD, setting a target price of Rs 3,700 at a current market price of Rs 3,145, signaling robust growth potential amid infrastructure and electrification booms. The 15 December 2025 report projects 15% earnings CAGR over two years, propelled by Smart Infrastructure (SI) and Mobility (MO) segments contributing 70% and 10% of EBIT, respectively, despite Digital Industries (DI) headwinds. FY25 disappointed with 8% revenue growth to Rs 155 billion and EBITDA margins contracting 180 basis points to 10.6%, but a Rs 423 billion order book—up 5% YoY—and locomotive production ramps herald recovery. Investors eye 18% upside, with SI's electrification play and MO's railway orders as catalysts, though DI indigenization lags. Risks include execution delays and margin pressures.

Financial Underperformance in FY25

Revenue Expansion Offset by Margin Erosion: Siemens posted Rs 154.85 billion in FY25 revenues, an 8% YoY rise driven by 14-16% growth in SI and MO, but DI slumped 7% amid private capex weakness. EBITDA dipped 7.5% to Rs 16.49 billion, with margins at 10.6% due to 500 basis points contraction in DI.

Profitability Squeeze: Adjusted PAT fell 5.8% to Rs 16.07 billion, yielding EPS of Rs 45.2, as other income moderated and depreciation rose. Quarterly Q4FY25 showed 16.6% revenue growth to Rs 46.34 billion and 14.9% EBITDA uptick to Rs 5.21 billion, yet PAT declined 9.9% YoY.

Order Book Resilience Signals Momentum

Robust Inflows and Backlog: FY25 order inflows hit Rs 200 billion, up 20% YoY, bolstering the Rs 423 billion order book—5% higher—with book-to-bill at 1.03x excluding the Rs 263 billion railway order. Ex-large order, backlog stands at Rs 160 billion, underpinning execution visibility.

Mobility's Transformative Pipeline: MO inflows surged 50% to Rs 50 billion, fueled by 9,000HP locomotive production ramp-up targeting 100 units annually by FY27-28. SI orders grew 15% to Rs 103 billion on electrification demand.

Segmental Dynamics and Growth Trajectories

SI's Electrification Edge: Commanding 50% of commercial buildings via process expertise, SI eyes 8%+ medium-term growth amid pricing pressures, with localization drives and data center tailwinds. Margins held at 13.9%, up 340 basis points over five years.

MO's Execution Ramp: Post-railway order, expansions into rolling stock and Kavach signaling promise margin expansion from 6.5%, with bogie exports enhancing profitability.

DI's Cautious Rebound: Lagging at 15% EBIT contribution, DI guides 6-8% margins versus FY25's 7%, hampered by transfer pricing and low localization in machinery/metals. Service automation via Comos software targets uplift.

Valuation and Investor Roadmap

Investment Levels for Traders: Support at Rs 3,000 (OB floor), resistance Rs 3,400 (52-week pivot); break above signals Rs 3,700 target. Long-term holders target Rs 4,000 by FY27 on 15% CAGR execution. Upside risks: superior inflows/margins; downsides: delays in DI/MO.