Nomura has retained its ‘Reduce’ rating on Siemens Ltd with a target price of ₹2,630, following the company’s weak operational performance for Q2 of its September-ended financial year (Q2SY25). While revenue and order inflows held strong, significant margin compression and lower profit weighed on the overall performance.
Siemens reported a 27.4% year-on-year drop in net profit to ₹582.5 crore, compared to ₹803 crore in the same quarter last year. Revenue was nearly flat, rising 2.6% YoY to ₹4,259 crore from ₹4,252.4 crore. Operating performance showed sharper deterioration, with EBITDA declining 26.6% YoY to ₹467.5 crore, and EBITDA margin contracting to 11% from 15.3%.
Margins and EBITDA fall short of expectations
Nomura highlighted that adjusted EBITDA fell 17% YoY, and came in 4% below its own estimates and 21% lower than consensus expectations. This underperformance was driven by weaker profitability in key industrial segments and rising input costs, which eroded operating leverage.
Despite revenue growth, Siemens faced margin divergence, with pressure in segments such as smart infrastructure and mobility. The brokerage now forecasts an EBITDA CAGR of 8% over FY24–FY27, reflecting a tempered outlook on core operating performance.
Robust order inflows a key positive
One of the few bright spots in the quarter was Siemens’ healthy order inflow, which was 21% higher than Nomura’s estimates, suggesting robust demand across electrification, automation, and infrastructure verticals. The order book strength provides medium-term revenue visibility but does not fully offset the concerns around margin pressure.
Nomura noted that although Siemens remains well-positioned in India’s industrial capex cycle, current valuations — at 60x/53x Sep’25F/Sep’26F EPS — appear stretched given the recent earnings performance and slower earnings momentum.
Cautious stance amid high valuation
“While order inflows remain encouraging, we continue to see downside risks to margins and earnings. At current multiples, the risk-reward appears unfavourable,” Nomura said in its report, justifying the retained ‘Reduce’ rating.
Disclaimer: This article is based on the brokerage report by Nomura. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
