CITI on Siemens ; Neutral, TP Rs 3875

Q2 ahead of Citi estimates across revenue, EBITDA and PAT. Orders rose 38% YoY to Rs62.3bn (with reported growth benefitting from price hikes), 4% ahead of Citie, & backlog increased 12% YoY to Rs470bn. Revenue grew 17% YoY to Rs57.3bn, 5% ahead of Citie, with growth led by smart infra and mobility. EBITDA margin recovered QoQ to 10.9% from 8.3%(adjusted for mobility one-off) in JuneQ26, albeit down c150bps YoY given continuing commodity and FX headwinds. QoQ margin recovery in smart infra was a clear positive - believe this partly reflects price hike impact apart from operating leverage. While mobility margins also recovered QoQ, mobility margins have historically been more volatile versus smart infra. EBITDA at Rs6.3bn was 24% ahead of Citie. Overall, robust orders and sequential EBITDA margin are encouraging though gross margins remain a monitorable - sustainability of EBITDA margin improvement would be key.

SIEMENS LTD

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