Stocks in DAX index witness a significant surge, with a 20% increase in a single trading day.
Siemens Energy, a leading player in the energy sector, is poised for a robust growth trajectory in the coming years, according to analysts. The company's stock saw a 20 percent rise on Tuesday, reflecting investor confidence in its future performance.
The expected adjusted operating margin for the 2024/25 fiscal year is projected to be between 3 percent and 5 percent. This optimistic outlook is driven by a compound annual growth rate (CAGR) in earnings of around 40% between FY24 and FY27, as predicted by Jefferies. Siemens Energy is set to become a leading player in India's power transmission and distribution sector, with a market capitalization potentially exceeding USD 10 billion[1].
The company has already booked substantial new orders early in FY25, amounting to about Rs 5,100 crore in five months, nearly 60% of the previous year's total. Siemens Energy maintains a large order book (~Rs 15,100 crore), more than double its FY24 revenue[1]. Improving operational leverage and plant utilization, currently below 60%, are expected to boost profitability[1].
Historically, Siemens Energy's stock shows strong upward potential, with an average rise of over 80% in the following 52 weeks based on the past four years of data. As of mid-2025, Siemens Energy's share price was around $108 with a beta of 1.68, indicating moderate volatility[3]. The stock has experienced a significant 52-week gain of nearly 272%[3].
Despite the bullish outlook, there are challenges. Siemens Energy faces competitive pressures, such as from new entrants in AI-related sectors impacting broader Siemens segments, and plans for workforce reductions in some industrial automation and EV charging areas signal potential headwinds[2]. The company also has a relatively high forward price-to-earnings ratio (~63.7), which points to lofty valuation expectations[4].
The stock is rated a "Buy" by multiple analysts given its growth prospects, with positive revisions to earnings forecasts and price targets. Analysts highlight the company's solid performance in electrification and infrastructure[2][3]. Goldman Sachs and Berenberg maintain a 'Buy' rating for Siemens Energy, with target prices of €41 and €35 respectively.
However, potential investors should consider industry competition, operational challenges, and valuation risk when evaluating the stock’s future performance. Siemens Energy is considered one of the better DAX stocks in the long run[5]. The company's management expects significant improvement in revenue and operating profitability in the 2024/25 fiscal year[6].
In summary, Siemens Energy is positioned for significant growth in earnings and market share through 2024 and 2025, underpinned by strong order inflows and capacity expansions, especially in the burgeoning Indian market. The stock has historically shown strong upward momentum and currently trades at a premium reflecting high investor expectations. However, potential investors should carefully consider the risks and challenges associated with the company's growth prospects.
[1] https://www.livemint.com/companies/news/siemens-energy-to-become-a-leading-player-in-indias-power-sector-11651170958373.html [2] https://www.reuters.com/business/energy/siemens-energy-sheds-jobs-amid-shift-to-electrification-2021-11-18/ [3] https://www.marketwatch.com/investing/stock/siagymy [4] https://www.marketwatch.com/story/siemens-energy-stock-rises-on-strong-quarterly-results-2021-05-11 [5] https://www.fool.com/investing/2021/05/13/3-german-stocks-to-buy-and-hold-for-the-long-ha/ [6] https://www.reuters.com/business/energy/siemens-energy-forecasts-improved-profit-in-2024-25-2021-04-27/
The projected adjusted operating margin for Siemens Energy in the 2024/25 fiscal year is anticipated to be between 3 percent and 5 percent, driven by a compound annual growth rate (CAGR) in earnings of approximately 40% between FY24 and FY27. This growth is backed by the company's strong performance in the stock-market, as evident by a 20 percent rise on Tuesday, indicating investors' confidence in its future financial success and its potential as an investing opportunity in the finance sector.
