Siemens shares surged nearly 5% on March 26, 2025, following the approval from the National Company Law Tribunal (NCLT) for the demerger of its energy business, Siemens Energy India Ltd. This significant move is expected to unlock value for the company and its shareholders.
The NCLT sanctioned the demerger scheme on March 25, 2025, officially recognizing the arrangement between Siemens Limited and Siemens Energy India Limited. According to a regulatory filing by Siemens, the equity allotment ratio for the demerger has been fixed at 1:1. This means Siemens shareholders will receive one equity share of Siemens Energy India for each share they hold in Siemens as of the record date, set for April 7, 2025.
The appointed date for the demerger is March 1, 2025, with the changes becoming effective on March 25, 2025. The plan reflects Siemens' strategy to enhance operational focus and improve the business structure aligned with the company’s goals. In a statement, Siemens remarked, “This is with reference to the Scheme of Arrangement between Siemens Limited and Siemens Energy India Limited, providing for the demerger of the Company's Energy Business to SEIL... In this regard, we would like to inform you that the Scheme has been sanctioned by the Hon’ble National Company Law Tribunal.”
Guilherme Vieira De Mendonca, who previously led the company's energy business, has been appointed as the Managing Director and Chief Executive Officer of Siemens Energy India. Meanwhile, Harish Shekar, the former finance head of the energy division, assumes the role of executive director and Chief Financial Officer.
In its recent fiscal Q3 earnings report, Siemens announced a 21.5% year-on-year increase in net profit for the December quarter, amounting to ₹614.6 crore compared to ₹505.7 crore in the previous year. However, its consolidated revenue fell by 3.3% to ₹3,587.2 crore from ₹3,709.5 crore in the prior year. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) also decreased by 11.5% to ₹401 crore, leading to a contraction in profit margins, down to 11.2% from 12.2%.
Despite a challenging year, the stock has shown resilience, gaining 60% over the past two years, although it has experienced a decline of 25% in the last six months. As of the latest trading, Siemens shares reached a day's high of ₹5,317.15 on BSE before closing at ₹5,229.50, reflecting a strong market reaction to the demerger news.
The 52-week high for Siemens shares was recorded at ₹8,129.95 with a low of ₹4,569.1. The current market capitalization of the company stands at approximately ₹1,90,916 crore. Trendlyne analysts suggest an average target price of ₹6,421 for Siemens shares, indicating a potential upside of 21% from current levels.
While the demerger is poised to reshape Siemens' operational landscape, analysts are optimistic that it will also enhance shareholder value. The spin-off aligns with Siemens AG's broader global strategy, which had previously demerged its energy business in 2020.
Investors are watching closely as Siemens Energy India prepares to take its place on the stock exchanges as a separate entity. The organization hopes to carve out a niche for itself in the energy sector, which has been increasingly pivotal in the face of the global push for sustainable solutions.
As the market reacts to this pivotal transaction, the future looks promising for both Siemens and the newly formed Siemens Energy India, offering opportunities for enhanced growth and focused investment.
