Siemens Shares Surge 7% After NCLT Approves Energy Business Demerger – Should You Invest?

Siemens Ltd’s stock surged nearly 7% on March 26 after receiving NCLT approval for its energy business demerger. As part of the restructuring, shareholders will receive one share of Siemens Energy India for each Siemens Ltd share they hold, with the demerger taking effect on March 25 and April 7 set as the record date. Siemens Energy India will be listed separately, a move expected to unlock shareholder value. The newly formed entity will be led by Guilherme Vieira De Mendonça as Managing Director & CEO, while Harish Shekar will serve as Executive Director & CFO.

This demerger aligns with Siemens AG’s global strategy, which separated its energy business in 2020. In Q3 FY25, Siemens Ltd reported a 21.5% increase in net profit to ₹614.6 crore, despite a 3.3% revenue decline to ₹3,587.2 crore. EBITDA fell by 11.5%, and profit margins narrowed to 11.2% from 12.2%. However, the company secured ₹6,245 crore in new orders, reflecting an 18% growth. Siemens shares have dropped 18% since the start of 2025 despite today’s surge. Brokerage firm Elara Capital has issued a “Buy” rating with a target price of ₹5,940, anticipating a 16% CAGR in earnings and an 18% ROE from FY25-27.

Siemens Shares Surge 7% After NCLT Approves Energy Business Demerger – Should You Invest?

Siemens Ltd. saw a sharp rise in its stock price, climbing nearly 8% to ₹5,520 during morning trading on March 26, after receiving regulatory approval to spin off its energy division. The National Company Law Tribunal (NCLT) approved the demerger, allowing Siemens Energy India Ltd. to operate as an independent company. Existing Siemens shareholders will receive one share of Siemens Energy India for each Siemens share held, with April 7, 2025, set as the record date for determining eligibility.

The demerger officially took effect on March 25, with a retroactive transition date of March 1, referred to as the “appointed date.” Siemens Energy India is expected to list separately on stock exchanges, a move analysts believe could unlock significant value for investors.

Market Performance and Sector Trends

Siemens Ltd.’s stock surge outpaced broader market trends. While Siemens rose 1.97% to close at ₹5,220, the BSE Power Index gained 0.72%. Over the past month, Siemens stock increased by 7.06%, underperforming the BSE Power Index’s 10.68% rise and the SENSEX’s 4.74% growth. However, year-to-date, Siemens shares have declined by 18%, reflecting sector-wide challenges. In comparison, industry peers such as Torrent Power (up 1.64%) and Power Grid Corporation (up 1.53%) posted moderate gains. Trading volume for Siemens remained low, with just 3,639 shares traded—well below its one-month daily average of 12,334 shares.

Leadership and Strategic Shift

The newly formed Siemens Energy India will be led by Guilherme Vieira De Mendonça as Managing Director and CEO, with Harish Shekar as CFO. This restructuring aligns with Siemens AG’s global strategy, which separated its energy business in 2020. The demerger allows Siemens Ltd. to sharpen its focus on core operations in India, including digital industries and infrastructure solutions.

Financial Snapshot: Mixed Q3 Results

Siemens reported a 21.5% year-on-year increase in net profit to ₹614.6 crore for Q3 FY25, driven by operational efficiency. However, revenue declined by 3.3% to ₹3,587.2 crore due to weaker demand in key segments. EBITDA (earnings before interest, taxes, depreciation, and amortization) dropped 11.5% to ₹401 crore, leading to a contraction in profit margins from 12.2% to 11.2%. Despite this, the company secured new orders worth ₹6,245 crore, marking an 18% growth, though revenue from the energy segment declined slightly to ₹1,485 crore.

Analyst Outlook and Investor Sentiment

Brokerage firm Elara Capital has assigned a “Buy” rating to Siemens, with a target price of ₹5,940—indicating a potential upside of 23%. Analysts project a 16% compound annual growth rate (CAGR) in earnings through FY27, driven by Siemens’ diversified portfolio and India’s growing infrastructure investments. While short-term execution delays remain a concern, the firm highlights Siemens’ strong market position and potential gains from upcoming public and private sector projects.

Contrasting Trends

Despite the positive market reaction, Siemens shares remain 18% lower since January 2025. The stock reached a 52-week low of ₹4,569.10 on March 3, 2025. However, analysts view the recent restructuring as a long-term growth opportunity. By afternoon trading, shares moderated slightly to ₹5,502, still reflecting a 7.6% increase from the previous close.

Conclusion

Siemens’ strategic demerger aims to enhance operational efficiency and agility in both its energy and core business segments, aligning with its parent company’s global restructuring efforts. While near-term financials show mixed results, strong order bookings and India’s infrastructure growth provide a promising outlook. Investors remain cautiously optimistic, balancing short-term volatility against long-term growth potential.