Siemens’ order book shines, but input costs remain a concern

Résumé détaillé

Siemens’ order inflows and revenue growth point to a gathering capex cycle, but rising input costs and competitive bidding could constrain margin recovery.

Siemens’ strong order pipeline in the September quarter (Q2FY27), healthy execution and improving sequential margins suggest that the capital expenditure cycle is gathering momentum. But rising input costs weighed on profitability, raising questions about how much of the growth opportunity can translate into earnings.

Consolidated Q2 revenue increased 17% year-on-year to ₹5,734 crore, with broad-based growth taking it ahead of analyst estimates. The smart infrastructure business led the way, clocking 20% revenue growth to ₹3,281 crore. Mobility and digital industries grew 14% and 8% to ₹1,291 crore and ₹1,150 crore, respectively.

Smart infrastructure is expected to maintain its momentum, as investments in power distribution, grid modernisation, renewable energy integration and data centres create a favourable demand environment. Battery storage, electronics manufacturing and EV charging infrastructure offer additional opportunities.

Motilal Oswal Financial Services expects the segment to clock a 17% revenue CAGR over FY26-FY29, with Ebit margin ranging between 11% and 14%. As the segment gradually transitions from a hardware-centric business towards a solutions-led one, with a greater contribution from value-added products, software and services, Nomura expects its Ebit margin to improve from around 10% in H1FY27 to 13% by FY29.

Mobility could receive a leg-up from a ramp-up in locomotive deliveries, even as the broader railway, transportation and industrial capex cycles pick up pace. But its Ebit margin remains a concern, having compressed 364 basis points (bps) year-on-year to 7.5%. Digital industries’ Ebit margin compressed by 200bps to 5%, but Motilal Oswal believes the metric has stabilised around this level. Whether this marks the beginning of a sustained recovery remains to be seen.

Reflecting these opportunities, order inflows rose 38% to ₹6,228 crore, taking the order backlog to ₹47,034 crore.

Importantly, the management cited an improvement in private-sector…

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