Well energized for transition
We attended Siemens Energy India (SEL) analyst day, where management articulated a strategy that capitalizes on its unique position at the confluence of India’s energy growth and the global energy transition. SEL is strategically positioned in the high-growth power transmission (T&D) business and stable power generation & services. Exports (23% of FY25 revenue) are largely driven by T&D products like transformers whilst services (~26% of FY25 revenue) is driven by Gas/Steam turbines installation in India. SEL power generation manufacturing is driven by domestic industrial steam turbines demand of average 25MW size. Larger steam turbines are imported whilst gas turbines spares are also sourced from parent to service current installed base in India. Power transmission has largely been localised except for HVDC IGBT components/semiconductors which are imported. HVDC pipeline looks robust with LCC based HVDC awarding expected at 1-2 projects/year whilst one VSC project is expect every two years. SEL will bid for VSC projects only which implies it needs to focus more on base business wins and rely on higher exports mandate from parent. Other technologies /products like PEM electrolysers, synchronous condensers and storage solutions will be imported for now. SEL sees big opportunity on the nuclear power side where it expects to supply steam turbines. SEL remains at the forefront of delivering essential technologies for grid stability, power generation and clean energy. Given the strong cash flows, robust order book, export opportunities and limited competitive intensity, we maintain BUY rating on SEL with a TP of INR 3,482/sh (60x Sep-27E EPS). Bid pipeline remains strong and new awards are expected to pick pace in next few quarters.
▪ HVDC is a core global growth vector: Management emphasized the immense global HVDC market, driven by renewable integration in Europe and the US. The technology focus is shifting from traditional LCC to the more modern and feature rich VSC technology. While core semiconductors (IGBTs) are currently imported, SEL is aligning with the global strategy to advance high-power VSC solutions and has localization plans timed with market evolution. For emerging verticals like electrolysers and synchronous condensers, SEL’s strategy is not immediate full-scale manufacturing. It will begin with assembly, packaging, and SKD operations in India, partnering for core technology and importing key components (e.g., from Germany). Full localization will be pursued only upon the crystallization of sufficient, sustained demand.
▪ Strong order backlog: SEL’s robust order intake of INR 131.1bn in FY25 has led to a record order backlog of INR 162bn (+47% YoY), providing multi-year revenue visibility. While Q4FY25 margins were diluted by mix, this is a transient phase. The core power transmission segment continues to see sustained traction, supported by domestic grid expansion (notably 765kV lines) and export opportunities. The bid pipeline remains strong, with new awards expected to accelerate in coming quarters.
▪ Post-demerger, SEL is well-positioned to support India’s energy transition: SEL stands as a direct structural beneficiary of India’s enduring energy transition. The company’s growth is powered by multi-decade tailwinds: 1) the nation’s longterm electrification and grid expansion cycle, the imperative for renewable integration and grid stabilisation, 2) the rising demand driven by industrial decarbonisation and energy efficiency mandates, 3) further amplifying this is the strategic trend of increasing localisation and exports of high-value power equipment. Supported by its established technology leadership, a comprehensive portfolio of solutions, and proven execution capabilities, SEL is favorably positioned to compound earnings consistently over the medium term.
Siemens Energy – Update – Dec25 — HSIE-202512110727499738168
