Sales have declined for the second consecutive year at Siemens Ltd. The company, whose fiscal year ends in September, has seen its sales fall 6% in the last year. For the last quarter, they are down 2%. The performance in the September quarter was affected by the lack of orders and slow pace of project execution in the metals sector, Religare Capital Markets Ltd said in a note. Revenue at the mainstay energy and industry business segments fell 5.5%. While the healthcare business did well, cost optimization measures helped the company improve the earnings before interest, taxes, depreciation and amortization (Ebitda) margin by 1.6 percentage points to 6.9%.

The expansion in margin, though, is providing little comfort to investors. As the stock price since the announcement of the latest earnings suggests, investors are concerned about continuing weakness in order inflows. Orders in the September quarter fell 16%. For the full year, they are down 6%.

Clouding the outlook is weak investment activity in India. On the ground, no user industry is significantly expanding capacities, leading to muted demand conditions. The company told analysts that it is not seeing any “major movement" in its endmarkets. As a result, the management fears ordering activity may remain weak next year also, Barclays Research said in a note. “The earliest uptick is likely to be a year later, as per management, and that is if policy announcements are implemented," Barclays Research said. The commentary also underpins the fact that the industry division, which caters to the troubled metals and power sectors, is weighed down by low investments. “Lack of incremental demand in the power generation business, absence of large project orders and continued weakness in the metals sector are hurting the business environment," Religare Capital Markets said.

The weak performance and outlook has led to cuts in earnings estimates. Barclays Research has lowered its earnings per share estimates for the current fiscal (2014-15) by 7%.

That said, the central government’s focus on improving and building railways and urban infrastructure augurs well for the company. As and when the investments happen, Siemens can look to sell more of its building, motor and mobility solutions. “Management believes that any movement in locomotive factories, the setting up of high-speed rail and the improvement in metro construction would be drivers for them," Barclays Research says.

What is not yet clear, however, is when activity on the ground will pick up.