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On Tuesday, UBS analyst Amit Mahawar upgraded Siemens Ltd . (NSE:SIEM:IN) stock from Neutral to Buy, establishing a new price target of INR8,000.00. Mahawar provided insights into the decision, noting that Siemens (ETR:SIEGn)' business structure is notably diversified and robust compared to its competitors, with approximately 65% of its revenue coming from its electrification segment which is expected to benefit from a strong cycle.
The analyst also pointed out that the current market consensus might be underestimating the potential benefits Siemens could reap from the ongoing global energy cycle. This includes the possibility of increased exports due to capacity expansion and the potential impact of a demerger. Mahawar argues that the recent decline in Siemens' stock value is more closely related to a slowdown in government capital expenditures rather than concerns about the company's order book or earnings projections.
UBS's outlook is based on the assessment that Siemens offers a favorable risk-reward ratio, especially as the stock is currently trading at 55 times UBS's forecasted earnings per share for the fiscal year 2026. This valuation is close to the company's five-year average, suggesting that the stock may be positioned for recovery.
The upgrade comes with a caution, however, as Mahawar identifies potential risks associated with a slowdown in transmission and mobility capital expenditures. These factors could pose challenges to Siemens and are considered key risks to the company's outlook as per the UBS analysis. Despite these concerns, the upgrade reflects a positive view of Siemens' future performance in the market.
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