Siemens Limited has announced a significant restructuring of its business portfolio, divesting its low voltage motors and geared motors businesses while simultaneously expanding its presence in the electric vehicle (EV) charging sector.

Divestment of Motors Business

The Board of Siemens Limited has approved the sale of its low voltage motors and geared motors businesses to Siemens Large Drives India Private Limited for Rs 2,200.00 crore. This transaction is set to take effect from October 1, 2023. The divested business units have been substantial contributors to Siemens Limited's financial performance:

This strategic move aligns with Siemens AG's global strategy to carve out its motor businesses into a separate entity, Innomotics GmbH.

Special Dividend Announcement

In a move that will likely please shareholders, Siemens Limited plans to distribute 100% of the sale proceeds as a special dividend. This distribution will occur after deducting the applicable capital gains tax, which is estimated to be approximately 23%.

Acquisition in EV Charging Sector

Concurrent with the divestment, Siemens Limited has made a strategic acquisition in the growing electric vehicle market. The company has purchased the electric vehicle division of Mass-Tech Controls Private Limited for Rs 38.00 crore. This acquisition is aimed at strengthening Siemens' e-mobility charging infrastructure capabilities.

Key details of the acquired EV business:

• Purchase price: Rs 38.00 crore
• Reported revenue: Rs 16.70 crore

Strategic Shift

Siemens Limited's management has emphasized that these moves are part of a broader strategic shift. The company is focusing on moving up the value chain, transitioning from traditional electrification products to more advanced digitalization and automation solutions.

This realignment of the business portfolio demonstrates Siemens Limited's commitment to adapting to changing market dynamics and positioning itself for future growth in high-tech sectors.

The divestment of the motors business, coupled with the acquisition in the EV charging sector, marks a significant milestone in Siemens Limited's strategic evolution. As the company pivots towards more technologically advanced solutions, stakeholders will be watching closely to see how these changes impact its market position and financial performance in the coming years.

Siemens Limited reported mixed financial results for the first quarter, with strong revenue growth offset by a decline in profitability. The company's performance showcased resilience in its top-line growth while facing challenges in maintaining profit margins.

Revenue Growth

Siemens witnessed a robust increase in its consolidated revenue, which rose to ₹46.50 billion in Q1, marking a significant 24% year-over-year growth from ₹37.60 billion in the same quarter last year. This impressive top-line performance exceeded analyst expectations of ₹42.59 billion, demonstrating the company's strong market position and ability to drive sales growth.

Profitability Challenges

Despite the strong revenue growth, Siemens faced headwinds in its profitability metrics:

Performance Analysis

The divergence between Siemens' revenue growth and profitability metrics suggests that the company may be facing challenges in cost management or experiencing pressure on its margins. While the strong top-line growth indicates robust demand for Siemens' products and services, the decline in profitability highlights the need for potential operational efficiency improvements.

Recent Stock Performance

Following the release of these results, Siemens Ltd shares fell 2.16% to ₹2,965.20. This decline was primarily attributed to the 3.1% decrease in profit after tax to ₹423 crore for the June quarter, compared to ₹437 crore in the same period last year. The company cited lower other income as a factor in the profit drop.

Additional Financial Metrics

• Revenue from operations grew 15.5% to ₹4,347 crore
• Earnings per share decreased to ₹11.89 from ₹12.28
• New orders rose 13% to ₹5,680 crore
• Order backlog increased 8% to ₹42,845 crore
• Profit from operations grew 9.2% to ₹454 crore

Analyst Ratings

Brokerage firms provided mixed ratings following the results:

• Motilal Oswal maintained a neutral rating with a ₹3,300 target price
• Avendus kept a reduce rating with a ₹2,879 target price
• Antique maintained a buy rating and raised its target price to ₹3,892 from ₹3,179

These varied analyst perspectives reflect the complex nature of Siemens' current financial position, balancing strong revenue growth against profitability challenges.