Nuvama initiates buy ratings on SG Mart, Siemens Energy India
Nuvama has initiated coverage on SG Mart and Siemens Energy India with buy ratings, pointing to a major shift in India's steel distribution and high-voltage power transmission sectors.
Brokerage Nuvama has initiated coverage on SG Mart and Siemens Energy India with buy ratings, setting target prices of Rs 777 and Rs 4,200 respectively. The dual recommendations hinge on two distinct but critical infrastructure narratives developing within the Indian economy: the shift toward value-added steel manufacturing and a multi-trillion-rupee expansion in high-voltage electricity transmission.
SG Mart is actively moving away from its origins as a pure trading platform to establish itself as a manufacturer of value-added steel products. Nuvama described the company as “erecting a manufacturing legacy,” pointing to its growing footprint in the B2B marketplace, renewable energy structures, and branded steel markets. While the brokerage acknowledged the company is still in the early stages of building market credibility, it views the growth roadmap as highly compelling.
The financial projections for SG Mart are aggressive, with Nuvama expecting a revenue compound annual growth rate of 31% between FY26 and FY29E. Profitability is forecast to scale even faster, with EBITDA growing at a 76% CAGR and profit after tax expanding at a 73% CAGR. Supported by roughly Rs 1.5 billion in planned capital expenditure over three years, Return on Capital Employed is projected to jump from 10% in FY26 to 27% by FY29E, though steel price volatility and execution risks remain key challenges.
Power transmission upside
Siemens Energy India presents a different investment case, rooted in India’s estimated Rs 8 trillion high-voltage transmission and distribution investment cycle. The engineering firm’s order backlog currently exceeds Rs 184 billion, equating to roughly 2.4 times its FY25 sales. Nuvama argues this robust pipeline positions the company to capture sustained demand from both grid expansion and broader power generation growth.
From a valuation perspective, Siemens Energy India currently trades at a noticeable discount to its industry peers. The stock is changing hands at around 50 times its FY28E price-to-earnings ratio, compared with a peer average of nearly 60 times. Nuvama applied the higher 60x multiple to its FY28E earnings per share estimate of Rs 70.1 to arrive at the Rs 4,200 target price, noting that potential contracts in VSC-HVDC projects and nuclear energy remain unpriced upside triggers.
