The demerged transmission and distribution (T&D) entity of Siemens, Siemens Energy (SE) will be listed on the bourses on Thursday. Siemens demerged on April 7 and Siemens ex-Energy price opened at ₹2,450/share and implied ₹2,478 per share value for the Siemens Energy (SE) entity, said Jefferies in a note.
This should be India’s largest listed pure-play power T&D equipment player at $10 billion plus market cap followed by Hitachi and GE at $6.8-9.6 billion.
“We believe SE should see 40 per cent EPS CAGR in FY24-27E driven by the robust T&D pipeline and operating leverage implying healthy upside potential below ₹3,000 per share. SE to see 2x EPS CAGR in FY24-27E vs ex-Energy: SE should be a key beneficiary of the $100 billion plus transmission capex pipeline,” the foreign brokerage firm said.
“Current margins reflect <60 per cent utilisation at its T&D facilities which offers operating leverage linked upside. Hitachi Energy (Hitachi; POWERIND IN, ₹18,654, NC) and GE Vernova T&D (GE; GVTD IN, ₹2,300, NC) are comparable to SE and are trading at 66x and 54x PE Mar-27E. At these multiples, SE can list between ₹2,995 per share to ₹3,711 per share. We believe SE can trade at 60x PE Mar-27E, which is a 9 per cent premium to our PT multiple on Siemens ex-Energy, implying a PT of ₹3,350 per share,” analysts of Jefferies further said.
According to Jefferies, “Our ₹3,700 PT values Siemens India e-Energy at 55x PE Mar-27E, which is in-line with our PT multiple for ABB (ABB IN, ₹6,035, Buy) and pre-demerger multiple for Siemens.”
This reflects the improved outlook on railways and potential order flow and margin surprise from there, it said. The downside risks are fixed cost rise faster than revenue growth; and capex cycle trends further weakening, the note added.