Prabhudas Lilladher has maintained a 'Hold' rating on Siemens with a target price of Rs 3,831. While the company shows strong revenue growth, core profits are under pressure due to rising costs and working capital strain, partially masked by a one-time gain from the sale of its motor business.
Brokerage firm Prabhudas Lilladher has maintained a 'Hold' rating on Siemens, setting a target price of Rs 3,831 for the stock. This update comes as the company manages a challenging cost environment, despite sustained demand for its industrial and infrastructure offerings. As of August 12, 2026, the stock was trading around Rs 4,012.
Financial Performance and Core Profitability
The company's Q1 FY27 results show a divergence between revenue growth and core profit. Revenue from operations increased 15% year-over-year to Rs 4,714 crore, signaling healthy demand. However, operating margins faced significant pressure, contracting by 340 basis points to 9.15% for the quarter. While the reported net profit was Rs 2,143 crore, the bulk of this figure—Rs 2,099 crore—came from a one-time gain following the sale of the Low Voltage Motors (LVM) business. When removing this one-time event, the core net profit actually declined by approximately 19% to Rs 343 crore, reflecting the impact of commodity inflation and foreign exchange volatility on the company's bottom line.
Order Pipeline and Operational Risks
Despite profitability challenges, Siemens continues to see momentum in new business. The company reported a 16.5% year-over-year increase in order inflows, reaching Rs 6,328 crore. This pipeline provides revenue visibility in segments such as Smart Infrastructure and Digital Industries. However, the operational reality for investors includes rising costs related to raw materials and a noticeable increase in working capital requirements. The company's working capital cycle, a measure of how efficiently it manages its cash and inventory, has increased from 47.5 days to 71.3 days, which can put stress on cash flows if not managed efficiently.
Valuation and Future Monitorables
The stock currently trades at a high valuation, with a price-to-earnings (P/E) ratio of approximately 95.1 and is trading at 10.3 times its book value. Brokerages are noting these valuation levels as a reason for caution, particularly as the company works through cost-related margin pressure. Investors tracking Siemens should focus on whether the company can improve its core margins in the coming quarters. The key monitorable will be the company's ability to convert its robust order book into profitable growth while managing the increased working capital cycle and maintaining control over input costs.