Weak Q1 show drags Siemens share price 4%; Should you buy, sell, hold?

Siemens share price: Technology-based solutions provider Siemens share price dropped as much as 3.59 per cent to hit an intraday low of Rs 5,018.7 per share on Thursday, February 13, 2025.

 

The downfall in Siemens’ share price came after the company posted weak results for the first quarter ended December 31, 2024 (Q1FY25).  

 

Siemens’ consolidated revenue dropped 3.3 per cent year-on-year (Y-o-Y) to Rs 3,587.2 crore in Q1FY25, as against Rs 3,709.5 crore in the same quarter a year ago (Q1FY24). 

 

Net profit, however, surged 21.5 per cent Y-o-Y to Rs 614.6 crore, as against Rs 505.7 crore a year ago. 

 

Operating performance was weak too. Earnings before interest, tax, depreciation and amortisation (Ebitda) dropped 11.5 per cent Y-oY to Rs 401 crore, from Rs 453 crore a year ago. Subsequently, Ebitda margin squeezed 100 basis points (bps) to 11.2 per cent in Q1FY25, from 12.2 per cent in Q1FY24.

 

The new orders for Siemens grew 20 per cent Y-o-Y to Rs 4,258 crore. Moreover, the company claimed that the announced demerger of the energy business is on track.

 

“Our smart infrastructure and mobility businesses, which are largely linked to Government spending in Capex, continued to grow profitably. However, our revenue and consequently also our profit from operations for this quarter were impacted by a slowdown in the short cycle private sector capex spending and the normalisation of demand in our digital industries business,” said Sunil Mathur, managing director and chief executive officer, Siemens Limited.

 

On the outlook, Mathur added, “With the announcements in the recent Union Budget, we expect a positive impact on our businesses from the Government's continued emphasis on building a world-class infrastructure, measures to boost consumption and the increased focus on manufacturing.”   Also Read: Q3 results today

 

Considering these factors, here is what top brokerages said on Siemens Q1 results:

 

Nuvama

 

According to analysts at Nuvama, Siemens reported a subdued Q1FY25 for its railways/industrial segment (excluding energy), with a 3 per cent Y-o-Y sales decline and a 100bps Y-o-Y OPM contraction to 11.2 per cent. However, operating income saw a 20 per cent Y-o-Y increase. Management cited slower short-cycle private capex and normalised demand in the Digital Industries segment hurting profits.

 

The energy segment, which is expected to be demerged by December 2025, showed strong performance with a +28 per cent Y-o-Y revenue growth and a doubling of the PBT margin to 22.7 per cent. 

 

Considering these factors, Nuvama retained its ‘Hold’ rating, despite optimism surrounding the energy segment post-demerger, supported by HV T&D capex. The target price is revised to Rs 5,875 (from Rs 7,000), using a Sum-of-the-Parts (SotP)-based valuation, with 65x for the high-growth Energy segment and 50x for slower non-energy segments (rail/metro/industrial), based on Sep-27 EPS.

 

Motilal Oswal

 

Motilal Oswal analysts said Siemens reported demerged financials for Q1FY25, with combined revenue 9 per cent below estimates, but PAT coming in 3 per cent ahead. 

 

Meanwhile, the non-energy segments were negatively impacted by slower private sector capex in short-cycle projects and normalisation in demand within the digital industries segment. The demerger of the energy segment is on track, analysts highlighted. 

 

Given this, Motilal Oswal has lowered its EPS estimates by 7 per cent/8 per cent/10 per cent for FY25/FY26/FY27, considering a slower-than-expected recovery in the smart infrastructure, digital industries, and mobility segments, while forecasting slightly better growth in the energy segment. 

 

The analysts also plan to revise their estimates once full-year details of the demerged entity are available. Meanwhile, they have maintained a ‘Neutral’ rating with a reduced target price of Rs 5,750, based on 55x Mar’27 estimates for the combined entity.

 

UBS

 

UBS reportedly maintained a ‘Buy’ rating with a target price of Rs 8,000. It said the energy segment’s performance remains strong, continuing its healthy growth. However, there was a notable negative impact on the ex-energy P&L due to weakness in the short cycle. Moreover, mobility and electric segments saw a positive margin expansion. 

 

A key negative for UBS analysts was a sharp drop in the Digital Industries segment’s revenue.