Nomura on Siemens (SIEM.NS): Big Miss on Operating Performance; Solid Order Intake
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Nomura keeps a Neutral rating on Siemens (SIEM.NS) while cutting FY27F-FY29F EPS estimates by 4-8% on margin pressure, yet raising its SOTP-based target price to INR3,757 (from INR3,700) as valuation rolls forward to September 2028 earnings; the target implies roughly 4.0% downside. In 1QFY27, revenue grew 15% year over year to INR47.1bn, broadly in line, and order intake was strong at INR63.3bn, up 17% — or 43.9% excluding the large-order base a year earlier. However, gross margin contracted 166bp year over year to 28.9% on commodity and currency headwinds, and adjusted EBITDA margin fell 430bp to 8.4%, leaving adjusted EBITDA down 24% year over year and 21% below expectations. Segment EBIT margins dropped 562bp in Digital Industries and 577bp in Smart Infrastructure, while Mobility expanded 215bp. Recurring net profit declined 26%, missing estimates by 20%. Nomura trimmed FY27F/FY28F EBITDA margin forecasts by 60bp/48bp and net profit by 7-8%, expecting margins to remain pressured in FY27F. Management stays constructive on demand in semiconductors, batteries, data centers, and railways, with railway tender timing a key monitorable. At 66x FY28F EPS, Nomura views the stock's valuation as relatively rich.