Why Siemens Share Price is Rising

The engineering sector is experiencing a powerful surge in recent times. The surge is fuelled by factors like infrastructure development, rising global demand for automation, and a growing emphasis on clean energy solutions.

This positive momentum is translating into strong performance for leading players in the industry, and, Siemens, a global powerhouse in engineering and technology, is no exception.

Siemens holds a unique position within the rapidly growing engineering sector. The company has a diverse business portfolio which includes automation, infrastructure, electrification, and sustainable energy solutions - all areas experiencing significant demand.

No wonder, Siemens share price is on a notable upward trajectory. In the last six months the stock rallied 100%, and, in the last five it surged 15% which has caught investor attention. Let's delve deeper and explore the specific reasons behind this surge.

#1 Demerger of the Energy Business

Siemens on 14 May 2024 announced it would demerge and list its energy business, following the path of a global carve-out by its German parent three years ago.

The new company will mirror the shareholding of Siemens, and shareholders will receive one share of Siemens Energy India for every share of Siemens. The demerger and listing are expected to be completed by 2025.

The underlying market drivers and capital allocation requirements are fundamentally different in the energy business compared to the industrial business.

Hence, the management believes the demerger will enable both companies to pursue their specific strategies, focus on their core portfolios, and make decisions on capital allocation.

No wonder, investors took upon the news of demerger positively.

#2 Robust Financial Performance

Siemens follows October-September financial year. Hence January-March is the second quarter for the company.

The company's profits jumped significantly during the second quarter. It reported a net profit of Rs 8.1 billion (bn), which is 70.2% higher than the net profit reported in the corresponding quarter a year ago.

Improved sales volume, pricing gains, and productivity measures taken by the company, along with gains on account of the sale of property and dividends received from subsidiaries fuelled the growth of the net profit of the company.

The company's total revenues for the March quarter were Rs 57.5 bn, up 18.3% compared to last year. Its earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 41% year-on-year (YoY), to Rs 8.8 bn.

The total order book stood at Rs 51.8 bn. The orders from railways are coming for signaling systems and electrification.

What Next?

The global board of Siemens has a strong focus on India since it's the fastest growth market for the company globally.

The management aims at bagging huge number of orders from railways for rolling stock, Vande Bharat, and train signalling systems.

The renewable sector and discom network upgradation also give significant scope on orders for the company.

With this large expected inflow of potential orders, the company expects the order book for Siemens to double over the next five years with both base and large orders contributing to the growth.

Apart from railways, growing electric vehicles (EVs) industry also gives a growth opportunity to Siemens.

Siemens is present in the commercial vehicle industry and is looking to enter the passenger vehicle industry as well.

The company recently announced the acquisition of the EV division of Mumbai-based Mass-Tech Controls. The cost of the acquisition was approximately Rs 380 m.

How Siemens Share Price has Performed Recently

In the past five days, shares of the company have rallied more than 14%. In 2024 so far, it is up 78.2%.

The stock surged 100% in the past six months and around 87.2% in the last year.

The stock touched its 52-week high of Rs 7,249.2 on 16 May 2024 and a 52-week low of Rs 3,248 on 31 October 2023.

About Siemens

Siemens is the flagship listed company of Siemens AG in India. Siemens AG is a German multinational conglomerate corporation and the largest industrial manufacturing company in Europe.

Siemens Ltd is a technology company focused on industry, infrastructure, digital transformation, transport as well as transmission and generation of electrical power.

The company has been present in India since 1867, when Werner von Siemens, the founder of the company personally supervised the setting up of the first telegraph line between Kolkata and London.

To know more, check out Siemens financial factsheet and its latest quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...