Siemens (SIEM IN) – Q4FY26 Result Update – Soft Quarter; Elevated input costs weigh on margins – Downgrade to ‘HOLD’

We revised our EPS estimates by +4.7% for FY28E factoring in ramp up in execution of locomotive order which is likely to aid growth. Siemens (SIEM) reported a soft quarter with revenue up 14.6% YoY to Rs46.2bn, while EBITDA margin contracted 287bps YoY to 9.7% due to INR depreciation, elevated commodity prices and supplier-led inflation. However, the company implemented price hikes across DI and SI businesses, with benefits expected to flow through over the next 3–4 months The company reported strong order momentum with inflows of ~Rs67bn in Q6FY26 (including a ~Rs18bn bogie, traction motor and gearbox order from the parent company) and a record backlog of ~Rs450bn, supported by broad-based demand across industrials, railways, data centers and semiconductors, while management remained constructive on India’s capex cycle with no visible slowdown across private or public investment. DI saw normalised operations with healthy order traction from core industrial segments, while SI continued to benefit from electrification, renewables and data centers, though both segments faced input-cost and currency-related margin pressure. Mobility remained the key growth driver, supported by execution of the 9K HP locomotive programme with 40 locomotives dispatched and a clear ramp-up trajectory (~80 p.a. over next 2 years, ~100 p.a. during FY28–30 and ~160 p.a. during FY30–35), further reinforced by the long-term bogie order executable over FY29–39 with built-in escalation protection. The stock is currently trading at 63.2x/52.8x on the earnings of FY27/28E. We roll forward to Mar’28E and downgrade our rating from ‘Accumulate’ to ‘Hold’ given the recent rally in the stock price while valuing the stock at a PE of 51x Mar’28E (51x Sep’27E earlier) arriving at a TP of Rs3750 (Rs3,409 earlier).