Power stock to buy now for an upside of more than 30%; Recommended by Motilal Oswal

SYNOPSIS: Siemens Energy India is poised for strong growth, driven by power transmission demand, margin expansion and capacity additions, with Motilal Oswal projecting a 34 percent PAT CAGR and significant stock upside ahead.

Shares of a company involved in providing solutions across the entire energy value chain – from power and heat generation, transmission, to storage – are in focus on the stock exchanges, after the company eyes a robust 34 percent PAT CAGR by FY28, signalling over 31 percent upside ahead on the back of power transmission growth.

With a market cap of Rs. 1.03 lakh crores, shares of Siemens Energy India Limited closed at Rs. 2,895.9 on BSE, as against its previous closing price of Rs. 2,907.7. On 18th December 2023, the Board of Siemens Limited authorised the management to initiate exploratory steps to evaluate a potential demerger of the company’s Energy business, following requests from certain promoters.

Finally, the demerger of Siemens India and Siemens Energy India Limited was completed effective 25th March 2025, resulting in two independent companies with sharper business focus, each concentrating on its core activities, portfolios, and capital allocation.

Brokerage Target & Outlook

Domestic brokerage firm Motilal Oswal Financial Services has maintained its “buy” rating on Siemens Energy India Limited, assigning a target price of Rs. 3,800 per share. This valuation, based on 60x two-year forward earnings, suggests a potential upside of more than 31 percent from Friday’s closing price.

During its analyst meet, Siemens Energy outlined a strong opportunity pipeline across both domestic and overseas markets for its power transmission business, which remains the key growth driver. Management expressed confidence in sustaining 10-15 percent YoY growth in the segment, supported by firm demand trends. They also expect margin expansion, driven by improved pricing power and operating leverage, and anticipate healthy capacity utilisation of the new facilities set to come online in FY27, given the continued strength in enquiry levels.

The company’s strategic focus on VSC-based HVDC projects positions it well for long-term opportunities; however, near-term domestic HVDC order inflows may be constrained due to limited project availability, even though the broader non-HVDC market remains robust. Meanwhile, the power generation business, which is tied to sectors such as cement, steel, sugar, and ethanol, is expected to grow at a moderate pace, slightly slower than the transmission segment.

The power transmission segment continues to serve as a major growth engine for Siemens Energy India, benefiting from strong structural tailwinds in grid expansion, system stabilisation, and digitalisation. 

Management underscored the company’s technology leadership across transformers, AIS/GIS switchgear, advanced grid solutions such as FACTS, STATCOMs and synchronous condensers, as well as HVDC VSC systems. Notably, Siemens’ technology has been used in ~30 percent of India’s HVDC capacity, complemented by marquee achievements including major STATCOM orders and the commissioning of India’s first SF6-free 145 kV circuit breaker.

Given its strategic focus on VSC-based HVDC projects, the brokerage anticipates the outcome of the South Olepad HVDC project, which is expected to be awarded in the coming days. While the pipeline for these projects in the near term remains limited, demand for non-HVDC transmission projects continues to remain robust. Margins are expected to strengthen as pricing power holds firm and operating leverage improves with higher utilisation of these capacities.

In the power generation business, management highlighted that ~55 percent of India’s large steam turbines and ~25 percent of gas turbines are built using Siemens Energy’s technology – providing a strong base for ongoing service, modernisation, and upgrade opportunities. The company expects high single-digit growth in this segment, driven by steady demand for industrial steam turbines across cement, steel, sugar, and ethanol sectors, alongside stable services revenue. Gas turbine demand remains constrained due to limited fuel availability; however, Siemens Energy sees emerging opportunities in nuclear power, where it can supply large steam turbines, as well as in data-centre-driven gas turbine installations.

Looking ahead, in power transmission, the company stands to benefit from India’s planned doubling of transformation capacity by 2032, which is expected to significantly boost demand for transformers, AIS/GIS switchgear, HVDC-VSC systems and grid-stabilization solutions. Export markets are also likely to act as an incremental growth driver.

Motilal Oswal has broadly maintained its estimates and expects Siemens Energy to deliver a strong CAGR over FY25 to FY28. The brokerage forecasts revenue growth of 27 percent, EBITDA growth of 32 percent and PAT growth of 34 percent during this period, driven by robust momentum in both key verticals. Power transmission is expected to post a healthy 39 percent CAGR, while power generation is projected to grow at around 9 percent.

Growth in the transmission segment will be further supported by the commissioning of new transformer and switchgear facilities scheduled by late FY26 or early FY27. EBITDA margins are estimated at 20.7 percent in FY26, 21.7 percent in FY27 and 21.8 percent in FY28, with margin improvements expected to come from stable gross margins and operating leverage as revenue scales up. Key risks to this outlook by brokerage can come from a slowdown in ordering and supply chain issues, thus impacting margin.

The brokerage, however, notes key risks to this outlook – primarily a potential slowdown in ordering activity and supply-chain disruptions, either of which could weigh on margins.

Financials & More

In Q2 FY26, Siemens Energy experienced a significant rise in the revenue from operations of Rs. 2,646 crores, an increase of more than 48 percent QoQ and 27 percent YoY. Meanwhile, its net profit stood at Rs. 360 crores, representing a growth of around 37 percent QoQ and 31 percent YoY.

The company’s order backlog stood at Rs. 16,205 crore, representing a 47 percent increase compared with FY24. Order inflows in Q4 FY25 remained stable, largely because several orders were advanced into the third quarter. This shift is also reflected in the 47 percent YoY rise in the order backlog as of September 2025 versus September 2024.

Written by Shivani Singh

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Power stock to buy now for an upside of more than 30%; Recommended by Motilal Oswal appeared first on Trade Brains.