Siemens LVM business sale 'value-accretive'; JM Financial ups target price

JM Financial has a 'Add' rating and raised its target price on Siemens "modestly" to ₹3,480, reflecting higher expected other income

Siemens Ltd.'s target price was upped by analysts at JM Financial after its decision to divest its Low Voltage Motors (LVM) and General Motors segment for an enterprise value of ₹2,200 crore. It said that this marks the closure of a long-struggling business within the company. 

 

The brokerage noted that an earlier attempt to sell the unit had stalled over valuation concerns, but given the segment’s ongoing challenges and restricted access to technology, the latest transaction appears to be in the best interest of shareholders.

 

On Tuesday, Siemens said its board approved transferring the LVM and General Motors business to Innomotics India for ₹2,200 crore on a slump-sale basis. 

 

The LVM division designs, develops, tests, maintains and sells low-voltage AC motors for direct-on-line applications, including IEC-compliant models such as 1LE7, 1SE0, 1LA2, 1PQ0, 1LA8, 1PQ8, 1MB7, and customised variants like 1PT0 and 1PC7. It also manufactures geared LV motors and supplies spares, services and ancillaries.

 

The brokerage has a 'Add' rating and raised its target price on Siemens "modestly" to ₹3,480, reflecting higher expected other income from the enlarged cash position post-sale. JM Financial said it had assigned only ₹40 per share (₹1400 crore) to the business in its valuation, making the sale value-accretive in its view.   ALSO READ | Nuvama retains 'Buy' on Neuland Labs, sees CMS, peptide-driven growth 

According to the brokerage, the LVM business offered limited prospects for growth or margin improvement. It generated ₹967 crore in sales in the 12 months to September 2025, with JM Financial earlier projecting around ₹1,200 crore of annual revenue beyond FY28-29 and Ebit margins of roughly 4 per cent, with little scope for expansion. The Ebit for the 12-month period stood at ₹35 crore, while margins had been deteriorating in recent quarters, it said. 

 

JM Financial also noted that after minority shareholders rejected the earlier divestment proposal over valuation, Siemens appeared to scale back investments needed to expand the LVM unit, contributing to a steady decline in sales and margins.

 

The brokerage added that the removal of the business from June 2026, the expected completion timeline, would be positive for Siemens from an Ebitda margin-accretion standpoint. 

 

It expects upcoming commentary to shed light on the sustainability of margins in Smart Infrastructure, stabilisation of Digital Industries' profitability, and the durability of multi-quarter-high margins in the Mobility segment.