Mumbai, India – Shares of Siemens Limited declined by as much as 3.59% to an intraday low of ₹5,018.7 on Thursday, 13 February 2025, following the company’s weak first-quarter (Q1FY25) earnings report. Investors reacted negatively to the decline in revenue and operating margins, despite a notable rise in net profit.
The company’s consolidated revenue for Q1FY25 fell 3.3% year-on-year (YoY) to ₹3,587.2 crore, compared to ₹3,709.5 crore in Q1FY24. The decline in revenue was attributed to a slowdown in private sector capital expenditure (capex) and normalisation of demand in Siemens’ Digital Industries business.
However, the company’s net profit surged 21.5% YoY to ₹614.6 crore, up from ₹505.7 crore a year ago. This increase was primarily driven by improved operating efficiencies and cost-control measures in certain business segments.
Key financial highlights of siemens Q1FY25
| Financial Metric | Q1FY25 | Q1FY24 | YoY Change |
|---|---|---|---|
| Revenue | ₹3,587.2 crore | ₹3,709.5 crore | ▼ 3.3% |
| Net Profit | ₹614.6 crore | ₹505.7 crore | ▲ 21.5% |
| EBITDA | ₹401 crore | ₹453 crore | ▼ 11.5% |
| EBITDA Margin | 11.2% | 12.2% | ▼ 100 bps |
| New Orders | ₹4,258 crore | N/A | ▲ 20% |
Despite the revenue decline, new orders surged by 20% YoY to ₹4,258 crore, reflecting strong demand in key segments. Additionally, the planned demerger of Siemens’ energy business remains on track, with completion expected by December 2025.
Management’s outlook
Sunil Mathur, Managing Director and CEO of Siemens Limited, addressed the challenges impacting Q1FY25 results, stating:
“Our smart infrastructure and mobility businesses, which are largely linked to government capital expenditure, continued to grow profitably. However, our revenue and profit from operations were affected by slower short-cycle private sector capex spending and the normalisation of demand in our digital industries segment.”
Mathur remained optimistic about future growth, citing the government’s continued focus on infrastructure development, increased manufacturing incentives, and pro-growth measures announced in the Union Budget 2025 as key drivers for Siemens’ future performance.
Brokerage reactions – should you buy, sell, or hold?
Following Siemens’ Q1FY25 results, leading brokerage firms provided mixed recommendations, reflecting concerns over slowing non-energy segments while acknowledging the strong growth potential of the energy business post-demerger.
Nuvama – ‘hold’ rating (target: ₹5,875)
Analysts at Nuvama noted that Siemens’ railways and industrial segment (excluding energy) reported subdued performance, with:
- A 3% YoY decline in sales
- A 100 basis point contraction in operating profit margin (OPM) to 11.2%
- Operating income increasing by 20% YoY
On a positive note, Nuvama highlighted the energy segment’s strong 28% YoY revenue growth, with its profit before tax (PBT) margin doubling to 22.7%.
Given the contrasting performance between energy and non-energy segments, Nuvama retained its ‘Hold’ rating but lowered its target price to ₹5,875 (from ₹7,000).
Motilal Oswal – ‘neutral’ rating (target: ₹5,750)
Motilal Oswal’s analysts pointed out that Siemens’ revenue was 9% below estimates, while profit after tax (PAT) exceeded expectations by 3%.
However, they raised concerns about the:
- Slower recovery in the smart infrastructure, digital industries, and mobility segments
- Weak demand in short-cycle private sector capex projects
Given these factors, Motilal Oswal revised its earnings estimates downward by 7-10% for FY25-FY27 and maintained a ‘Neutral’ rating with a target price of ₹5,750.
UBS – ‘buy’ rating (target: ₹8,000)
On the other hand, UBS remained bullish on Siemens, maintaining a ‘Buy’ rating with a higher target price of ₹8,000.
UBS analysts acknowledged the weakness in the short-cycle industrial segment, but were optimistic about the company’s long-term prospects, citing:
- Strong performance in the energy segment
- Margin expansion in the mobility and electrical segments
- A robust order book, positioning Siemens for future growth
A key concern for UBS was the sharp drop in revenue from the Digital Industries segment, but they believe this is a temporary weakness rather than a long-term issue.
Final verdict – what should investors do?
Buy, Sell, or Hold?
| Brokerage | Rating | Target Price | Key Reasoning |
|---|---|---|---|
| Nuvama | Hold | ₹5,875 | Weak non-energy segments, strong energy business |
| Motilal Oswal | Neutral | ₹5,750 | Slower-than-expected recovery in key segments |
| UBS | Buy | ₹8,000 | Strong energy segment performance, long-term growth potential |
Investment strategy
- If you are a long-term investor, UBS’s ₹8,000 target suggests that Siemens remains a strong buy, especially considering the growth potential of the energy segment post-demerger.
- For cautious investors, Nuvama and Motilal Oswal’s Hold/Neutral stance suggests waiting for further clarity on demand recovery in industrial and digital segments before making new investments.
- If you are a short-term investor, profit-booking may be an option, as near-term uncertainties could keep the stock volatile.
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Key risks to watch
- Slow recovery in private sector capex spending
- Weak performance in the Digital Industries segment
- Global economic slowdown impacting industrial demand
- Execution risk related to the energy business demerger
Conclusion
Siemens’ Q1FY25 results were a mixed bag, with a decline in revenue and operating margins overshadowing strong profit growth. While the energy segment continues to outperform, other business segments are facing demand weakness.
With a divergence in brokerage opinions, investors should carefully weigh their risk appetite and investment horizon. While the long-term growth potential remains intact, near-term headwinds could lead to short-term volatility in Siemens’ share price.
For now, Siemens remains a ‘Hold’ for cautious investors, while long-term believers in its energy transformation story may consider adding on dips.
