Siemens share price zooms 7% after NCLT nod for energy business demerger; Should you buy or sell?

Siemens Ltd. share price rose by nearly 7 per cent on Wednesday, March 26, following the National Company Law Tribunal's (NCLT) approval of the company's demerger with Siemens Energy India Ltd.

The equity allotment ratio for this demerger is set at 1:1, meaning Siemens shareholders will receive one equity share of Siemens Energy India for each Siemens share they hold as of the record date.

The record date for determining allotment eligibility is set for April 7, 2025. The appointed date for the demerger is March 1, 2025, and it will take effect from March 25.

Siemens Energy India will be listed separately on stock exchanges, with the company stating that this move will unlock value.

Guilherme Vieira De Mendonça, formerly the head of Siemens' energy business, has been appointed as the Managing Director and CEO of the newly demerged entity. Meanwhile, Harish Shekar, who previously served as the finance head of the energy business, has taken on the role of Executive Director and CFO.

Siemens AG, the parent company, globally demerged its energy business in 2020. The demerger of Siemens Ltd.'s energy business in India is a continuation of this global strategy.

Siemens Q3 results highlights

Siemens Ltd recorded a 21.5 per cent rise in net profit for the December quarter, reaching ₹614.6 crore compared to ₹505.7 crore in the previous year. However, its consolidated revenue declined by 3.3 per cent to ₹3,587.2 crore from ₹3,709.5 crore.

EBITDA also fell by 11.5 per cent to ₹401 crore from ₹453 crore a year ago, with the company's margin shrinking to 11.2 per cent from 12.2 per cent in the same period last year.

The company's new orders reached ₹6,245 crore, reflecting an 18 per cent growth compared to the same period last year. Meanwhile, revenue from the energy segment decreased year-on-year from ₹1,518 crore to ₹1,485 crore.

Should you buy or sell?

Brokerage firm Elara Capital has assigned ‘buy’ rating to Siemens Ltd, with a target price of ₹5940. The brokerage firm sees an upside potential upto 23 per cent.

"We reduce FY25E/26E EPS estimates by 11%/13% on account of delay in execution of locomotive orders and lower budgetary allocation for infrastructure likely impacting future order inflows for both government and private sectors.

So, we lower our TP by 17% to INR 5,940 (from INR 7,120) on 60x (from 65x) December FY26E P/E, in line with the average P/E for MNCs, led by delayed execution and factoring in slower-than-expected growth momentum. But we reiterate Buy as the stock has underperformed the Nifty by 36% in the past three months. We expect an earnings CAGR of 16% in FY24-27E and a 18% ROE in FY25-27E as we enter a multi-year capex cycle (both public and private capex). SIEM would be a key beneficiary given its diversified portfolio, technological edge and support from the parent," said brokerage firm in a note.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.