Siemens (SIEM IN) – Q1FY27 Result Update – Mixed Quarter; cost pressures weigh on profitability – HOLD

We revised our EPS estimates by -9.1% for FY27E factoring in impact on margin amid commodity inflation, forex volatility and higher input cost. Siemens (SIEM) reported a muted quarter with revenue up 14.8% YoY to Rs47.1bn, while Adj.EBITDA margin (for one time of Rs390mn in Mobility) contracted 430bps YoY to 8.4% due to INR depreciation and elevated commodity prices. Smart Infrastructure saw healthy revenue growth (+10.7% YoY), supported by robust demand across grid modernisation, data centres and commercial real estate, while Digital Industries also grew strongly (+24.9% YoY) on healthy demand across solar cell manufacturing, metals, electronics, pharma and water. However, margins in both businesses remained under pressure from higher material costs, commodity volatility and FX headwinds. Mobility reported healthy revenue growth (+12.8% YoY) led by the Rolling Stock business, while margins improved by 633bps to 10.2%, aided by a one-time Rs390mn gain. Strong order inflows of Rs63bn (~16% YoY) took the order book to Rs466.7bn, providing healthy revenue visibility and supporting the medium-term growth outlook. SIEM completed sale of its LVM business for cash consideration of Rs21bn. Resilient domestic demand across private and public sectors remains supportive, although near-term margins remain a key monitorable given continued input-cost and currency pressures. The stock is currently trading at 71.9x/53.4x on the earnings of FY27/28E. We maintain our rating to ‘Hold’ while valuing the stock at a PE of 51x Mar’28E (same as earlier) arriving at a TP of Rs3,831 (Rs3,750 earlier).