Jefferies, a prominent financial services company, has released a bullish forecast for Siemens Energy India Ltd, the soon-to-be-listed entity following its demerger from Siemens Ltd. The report highlights significant growth potential for the new company, driven by India's ambitious power sector expansion plans.

Accelerated EPS Growth Projected

According to Jefferies' analysis, Siemens Energy India Ltd. is expected to witness earnings per share (EPS) growth at twice the pace of the remaining Siemens Ltd. business. This optimistic outlook is underpinned by India's projected increase in power sector capital expenditure.

Power Sector Capex Boost

The report points to a substantial increase in India's power sector investments:

• Current to FY2030: Power capex expected to grow 2.5 times
• Projected investment: Over $300 billion between FY2024-2030

This significant boost in infrastructure spending is seen as a key driver for Siemens Energy India's growth prospects.

Siemens' Strategic Expansion

In line with the positive sector outlook, Siemens is making strategic investments to capitalize on the anticipated growth:

• Investment amount: Rs 460 crore
• Purpose: To double power transformer manufacturing capacity

This move indicates Siemens' commitment to strengthening its position in the burgeoning Indian power sector.

Valuation Adjustments

Jefferies has also provided updated valuations in light of the demerger:

Note: The Siemens Energy business valuation is a downward revision from earlier estimates.

Market Implications

The demerger and subsequent listing of Siemens Energy India Ltd. are expected to create two focused entities:

1. Siemens Energy India Ltd.: Positioned to leverage the growing power sector opportunities
2. Siemens Ltd.: Continuing its operations in other sectors

Investors and market watchers will be keenly observing how both entities perform post-demerger, especially given the optimistic growth projections for the energy business.

Conclusion

As India's power sector gears up for substantial expansion, Siemens Energy India Ltd. appears well-positioned to benefit from the increased capital expenditure. However, as with all investments, stakeholders are advised to conduct thorough research and consider various factors before making investment decisions.

Siemens Ltd shares experienced a significant surge, hitting the 20.00% upper circuit on the ex-date for its much-anticipated energy business spin-off. This corporate action has sparked intense investor interest, leading to a substantial increase in the company's stock price.

Spin-Off Details

The spin-off involves the demerger of Siemens Ltd's energy business, a strategic move that has been in the works for some time. As part of this corporate restructuring:

• Shareholders will receive one Siemens Energy India share for each Siemens Ltd share they hold.
• This one-to-one share distribution ensures that existing shareholders maintain proportional ownership in both entities post-demerger.

Regulatory Approval and Timeline

The demerger has cleared a crucial regulatory hurdle:

• The National Company Law Tribunal (NCLT) approved the demerger on March 26.
• The listing of the new entity, Siemens Energy India, is expected to take place within 60-90 days from the approval date.

Market Impact

The market's reaction to this corporate action has been overwhelmingly positive:

• Siemens Ltd's stock price hit the 20.00% upper circuit on the ex-date.
• This sharp increase reflects investors' optimism about the potential value unlocking from the spin-off.

Implications for Investors

This demerger presents several implications for Siemens Ltd shareholders:

1. Portfolio Diversification: Investors will now hold shares in two separate entities, potentially offering more focused exposure to different business segments.
2. Value Unlocking: The spin-off may allow each entity to be valued more accurately based on their respective business models and growth prospects.
3. Future Growth Opportunities: Both Siemens Ltd and the new Siemens Energy India may be better positioned to pursue targeted growth strategies in their respective domains.

As the energy business spin-off progresses, investors and market analysts will be keenly watching the performance of both entities in the coming months. The successful listing of Siemens Energy India will mark a significant milestone in this corporate restructuring process, potentially setting the stage for new growth trajectories for both companies.