Siemens shares jump 5% after it emerges L1 bidder for Indian Railways' electric locomotives project

Shares of Siemens gained in early trading on Wednesday after it emerged as the lowest bidder (L1) for the 9,000 Horse Power (HP) electric locomotives project in Dahod, Gujarat.

PTI reports that the estimated cost of the project is Rs 20,000 crore.

During the September quarter, the company had reported an order backlog of Rs 17,183 crore while new orders from continuing operations increased 25 percent year-on-year to Rs 4,009 crore.

Indian Railways had floated the tender at Dahod in April this year. The Dahod workshop is used for periodic overhaul of steam locomotives and will now be upgraded to an electric locomotive manufacturing unit. The plan is to manufacture 1,200 locomotives over a period of 11 years.

The railways expects the delivery of the first locomotive from the Dahod facility in early 2024.

Brokerage firm Macquarie believes that the order will be substantially higher than the company's current order backlog. Siemens expects robust order flow for its mobility segment to continue. It is working with a 23 percent order inflow compounded annual growth rate (CAGR) until financial year 2025.

For the Financial Year 2022, Siemens reported an increase of 43 percent in new orders, 18 percent in revenue and 20 percent in profit after tax from continuing operations over the previous financial year.

Macquarie has an outperform rating on Siemens with a price target of Rs 3,120.

Shares of Siemens are trading 5.3 percent higher at Rs 2,911.