Siemens India shares have been falling for six days in a row, as of December 24, 2024. The stock is in a correction zone due to investor worries after recent comments from management. Despite this, experts are hopeful about the company’s future in locomotives and infrastructure.
A Sharp Fall and Market Reaction
Siemens India shares have dropped over 16% from their highs, showing a correction phase. On December 24, the stock fell by 2%, showing ongoing negative feelings. Yet, the stock is up 66% for the year.
The big drop started on December 20, 2024, after the earnings call. The company said it won’t bid on certain HVDC projects. This news was a letdown for investors, as these projects use a common technology.
Siemens is now focusing on VSC technology, which is better but less used. This shift raised concerns about losing money, leading to the stock’s sharp fall.
Key Challenges Highlighted
During the earnings call, Siemens India talked about challenges and opportunities:
- Government and Private Capex:
- The company expects a boost in government spending on infrastructure starting January 2025.
- But, private spending is slow, except in areas like semiconductors, EVs, and batteries.
- Manufacturing Growth Indicators:
- Siemens saw an improvement in the manufacturing PMI in October, after three months of slow growth.
- This improvement is expected to boost manufacturing soon.
- Energy Business Demerger:
- Siemens India is splitting its energy division, a move expected to finish in the second half of 2025.
- After the split, growth in other areas will be key for the company’s future.
Sector Performance and Stock Analysis
Siemens India’s performance has been behind its peers and the market:
- On December 24, the stock did worse than the Sensex, which gained 0.30%.
- In the last month, Siemens shares fell 3.51%, while the Sensex dropped 0.43%.
- The stock is below its moving averages, showing it’s been weak for a while.
Analyst Ratings and Future Outlook
Despite recent losses, analysts have different views on Siemens India’s future:
- UBS: Neutral rating.
- Elara and Nuvama: Accumulate and Hold ratings, respectively.
- Antique: Maintained a Buy call, citing growth opportunities.
- HDFC Securities: Buy rating with a target price of ₹8,114, focusing on capex recovery and investments in locomotives and infrastructure.
Locomotive and Infrastructure Focus
Siemens India sees a big increase in orders for locomotives, including Vande Bharat trains, metro systems, and signaling projects. The company plans to spend ₹1,100 crore over two years to boost its transformers and transmission sectors. This shows its commitment to long-term growth.
Headwinds in the Digital Industries Segment
Management has talked about the tough times in the digital industries business:
- Semiconductor shortages and customers buying less have slowed growth.
- Prices are down, and the mix of products is not good for profits.
- But, the company thinks things will get better in this area soon.
Conclusion: A Balancing Act Between Challenges and Opportunities
Siemens India is facing short-term hurdles, like worries from investors and less spending by private companies. Yet, its growth story for the long run is strong. The company is investing in infrastructure and is splitting its energy business.
It’s also focusing on new tech like VSC. This shows a smart plan to grow in the future.
For those who invest, the current dip might be a chance to buy more shares. This is because government spending is increasing and the company is expanding in important areas.