Siemens Limited: Orders surge, backlog hits record, but margins feel the commodity and FX heat

Siemens Limited closed the quarter ended 31 March 2026 with strong growth in orders and revenue, even as profitability weakened due to sharp moves in commodities and the rupee. The company reported consolidated new orders of INR 67.3 billion, up 32.6% year on year, while revenue rose 14.6% to INR 46.2 billion. Order backlog increased to INR 450.3 billion from INR 412.1 billion, reinforcing visibility.

The pressure point was margins. EBITDA fell to INR 4.5 billion from INR 5.1 billion a year ago, taking the EBITDA margin down to 9.7% from 12.6%. Management attributed the decline primarily to higher material costs due to elevated commodity prices and rupee depreciation, and to the fact that not all cost increases could be passed through.

Macro backdrop: resilient demand, but inflation risk on watch

Management framed the environment around the West Asia conflict, rupee weakness and commodity volatility. Despite these factors, the company said it does not currently see a slowdown in either private or public capex. However, it highlighted that the next three to six months will be closely monitored for the impact of inflation and potential knock-on effects on interest rates and ordering.

The company also flagged the India EU free trade agreement as a longer-term opportunity for customers and therefore an indirect demand tailwind. Management added that import costs for Siemens could also decline in certain segments, subject to the final agreement details.

Consolidated performance: growth led by SI and Mobility

Orders and revenue growth were broad-based across businesses in the quarter. Smart Infrastructure and Mobility were the key drivers of higher order intake, while Digital Industries delivered stable order intake with revenue supported by backlog execution.

The financial bridge presented by management highlighted that material cost as a percentage of revenue rose to 74% in the quarter from 69% in the comparative period. Other costs, excluding demerger expenses, were largely stable. Management also pointed to the euro moving from an average of 91 INR per euro in the earlier period to 107 in the current quarter, alongside sharp increases in silver and copper prices.

Business performance: SI steady, Mobility surges, DI manages FX impact

Smart Infrastructure delivered strong top-line momentum. Orders rose to INR 29.6 billion in the quarter and revenue increased to INR 25.8 billion. Management said order growth was driven by power utilities, renewables and data centres. While the business is less sensitive to currency due to local manufacturing, commodity inflation weighed on margins.

Mobility continued to build momentum, supported by the 9,000 HP locomotive project and a large parent allocation order. New orders increased sharply to INR 28.0 billion. Management highlighted that 40 locomotives were dispatched from the Dahod facility by 31 March 2026, meeting the first contractual delivery dates, and said payment for those deliveries had been received. The company also outlined the delivery ramp plan for the project: 80 locomotives per year in 2026 and 2027, 100 per year from 2028 to 2030, and 160 per year from 2030 to 2035. Revenue for the quarter rose to INR 8.3 billion.

Digital Industries posted a moderate quarter on orders, with new orders at INR 9.7 billion, broadly flat year on year. Revenue grew to INR 11.5 billion, driven by backlog execution. Management cited demand from metals and mining, cement and food and beverage. Profitability in DI was impacted by the euro appreciation because of a higher share of products purchased from Germany.

Mix and themes: stable structure, data centres rising, portfolio action underway

Revenue mix remained largely stable year on year. For the 12 months ended March 2026, Smart Infrastructure contributed 55.5% of revenue, Digital Industries 22.7% and Mobility 20.6%. Domestic revenues remained around 87% of the mix, with exports about 13%.

Data centres emerged as a recurring theme in Q and A. Management described it as one of the fastest growing areas, largely within Smart Infrastructure, spanning electrification and integrated building management systems. While the company does not track detailed vertical-wise breakdowns publicly, management estimated that Siemens could capture around 10% to 20% of data centre capex wallet share, noting that civil work forms a large component.

On the portfolio front, management reiterated that the sale of the Low Voltage Motors business is on track for completion in June 2026.

Margins and cash: pricing actions, but volatility remains the swing factor

Management stated that two price increases have been implemented across DI and SI portfolios, and that the benefit typically shows with a lag of three to four months due to short-cycle nature of the businesses. However, it also acknowledged that full pass-through is not feasible when FX moves and commodity inflation are as sharp as observed.

Cash flow and working capital were also discussed. The CFO attributed lower cash levels primarily to higher inventories built to safeguard supply amid geopolitical uncertainty, and higher receivables and contract assets linked to quarter-end execution and mobility revenue recognition mechanics.

Takeaways

Siemens Limited ended the March 2026 quarter with strong demand indicators and a record backlog, reflecting sustained capex activity across key customer segments. The margin compression underscores the sensitivity of near-term profitability to commodities and currency, even when operational execution remains steady. The next few quarters are likely to hinge on how quickly pricing actions catch up with costs and whether macro-driven inflation pressures stabilize.