Why did Siemens India fall over 10% today?

During Friday’s trading session, the shares of a technology company focused on industry, infrastructure, transport as well as transmission and generation of electrical power slumped nearly 10.7 percent to Rs. 6,819.6 on BSE. 

With a market cap of Rs. 2.44 lakh crores, the shares of Siemens Limited closed in the red at Rs. 6,867.05, down by nearly 10 percent, compared to its previous closing price of Rs. 7,633.05. 

What’s the news: 

On 20th December, the management of Siemens Limited addressed analysts regarding its post-earnings call. During the discussion, the company acknowledged that private capex has not picked up meaningfully overall. While private capex in sectors like semiconductors and batteries remains steady, progress in traditional industries has been relatively slow. 

The management also highlighted a robust demand in the energy business, particularly within the transmission segment, driven by the transition toward renewable energy, and identified the HVDC segment as a key area poised for future growth. 

Additionally, Siemens stated that it is not currently engaging in tenders for Line Commutated Converter (LCC), either in India or globally. Instead, the company is focusing on the Voltage Source Converter (VSC) segment. 

Although most of Siemens’ existing projects are on LCC, the management noted that VSC-based projects are not material right now. Siemens India’s digital industries segment is currently experiencing challenges due to the semiconductor shortage and customer-driven destocking activities. 

According to the management, margins in this segment have declined during the quarter due to pricing pressures and an unfavourable product mix. However, they anticipate a recovery in the coming quarters as destocking efforts are over. 

Siemens highlighted that government spending in the infrastructure sector remained subdued during the H1 FY25 but is projected to accelerate in the second half. The company also referred to the manufacturing PMI indicator, which recovered in October from a nine-month low, driven by growth in new

orders and international sales. This rebound is expected to benefit the manufacturing sector, which has experienced a slowdown in activity over the past three months. In its investor presentation today, Siemens reported steady progress on the demerger of Siemens Energy and expects to complete the demerger and listing by CY25. 

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Financials: 

Siemens reported a significant growth in revenue from operations, experiencing a year-on-year increase of nearly 11.2 percent, rising from Rs. 5,808 crores in Q2 FY24 to Rs. 6,461 crores in Q2 FY25. 

Likewise, during the same period, the company’s net profit increased from Rs. 572 crores to Rs. 831 crores, representing a growth of around 45.3 percent YoY. 

Stock Performance: 

The stock has delivered positive returns of nearly 76.2 percent in one year, while around 8.7 percent of negative returns in the last six months. So far in 2024, the shares of Siemens have given positive returns of about 70.6 percent. 

About the company: 

Siemens Limited is engaged in the business of offering products, integrated solutions for industrial applications for manufacturing industries, drives for process industries, intelligent infrastructure and buildings, efficient and clean power generation from fossil fuels and oil & gas applications, transmission and distribution of electrical energy for passenger and freight transportation, including rail vehicles, rail automation and rail electrification systems. 

Written by Shivani Singh

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