Siemens India's Stock Soars To 52-Week High Following Strong Q1 Results; Brokerages Positive

Today, the stock market witnessed a significant buzz around Siemens shares, which soared to a new 52-week high shortly after trading began. The surge, over 8%, was propelled by the company’s impressive performance in the March quarter, capturing the attention of investors and brokerage firms alike. Siemens, recognized for its robust results, stood out amidst the upward trend observed in the market for the fourth consecutive day on the 15th.

Brokerage firm Incred has recommended Siemens as a stock to buy, elevating its target to Rs 7,565 per share from the previous Rs 4,400. This adjustment follows the company’s notable profit growth and its advantageous position in India's capital expenditure (capex) cycle, despite a slight dip in order inflow on a high base. Echoing this optimism, global brokerage firm Jefferies has also advocated for buying Siemens shares, updating their target price to Rs 8,000, up from Rs 5,575. The firm highlighted a capex of Rs 1,000 crore, indicating the management's confidence in growth, alongside an anticipated 35% increase in EPS for FY23-26E and a return on equity (RoE) consistently above 20%.

For the March quarter, Siemens India reported an 18.4% year-on-year increase in total income, reaching Rs 5,750 crore. This performance surpassed the previous year's Rs 4,858 crore. The operating profit too saw a 41.4% rise from Rs 621.2 crore to Rs 878.2 crore, with margin improving to 15.3% from 12.8%. The quarter’s profit stood at Rs 802.5 crore, a significant jump from Rs 471.4 crore a year earlier. Additionally, the company secured new orders worth Rs 5,184 crore during this period.

On May 13, the board of Siemens India greenlit a substantial investment for expanding its capacity. This includes a Rs 519 crore investment, with funds allocated to enhance the gas insulated switchgear facility in Goa and to develop a metro train manufacturing unit in Aurangabad. The gas insulated switchgear project will receive a phased investment of Rs 333 crore from FY25 to FY27, while the metro train facility will see an investment of Rs 186 crore spread from FY24 to FY28.

Furthermore, Siemens India announced a strategic move to demerge its power division. The board has approved the Scheme of Arrangement between Siemens India and Siemens Energy India Limited (SEIL), which will result in shareholders receiving one share of SEIL for every share they hold in Siemens India. This demerger is anticipated to culminate with SEIL shares being listed on stock exchanges by 2025, marking a significant reorganization within the company.