Siemens Energy Demerger: All You Need To Know
Electric equipment maker Siemens India appears on course to implement the demerger of its energy business, with the record date fixed as April 7 and the demerger ratio set at 1:1.
The demerged business will consequently soon be listed on the exchanges as Siemens Energy India. This can happen anywhere between 30 to 90 days from the record date.
Here are all details about the demerger.
What Happens On April 7?
On April 7, Siemens India will issue one Siemens Energy India share for one Siemens India share held. April 4 is the last trading day for Siemens India's energy portfolio. On April 7, a special pre-open session will determine the constant price for Siemens Energy India, which will then be subtracted from the share price of Siemens India.
This constant price will be the difference between Siemens India's closing price on April 4 and the open price of the stock determined during the special pre-open session. Passive fund managers will then maintain Siemens Energy India in all NSE and BSE indices for three days after the company lists on Indian exchanges.
Potential Listing Date
IIFL Securities expects the listing process to take 60-90 days from the record date; dating the listing in line with Siemens AG's guidance of June 2025. Nuvama suggests a faster process of a month due to Siemens India's size. Recent demergers like ITC Hotels Ltd. and Jio Financial Services Ltd. listed in 23-33 days, but Piramal Pharma and NMDC Steel took longer. The exact listing date is still uncertain.
Siemens Energy India: What Does It Do?
Siemens India's energy vertical focuses on providing integrated products, solutions, and services across the energy value chain. The company offers grid technologies, industrial power-gens, gas services and also carries out generation, transmission and industrial projects.
On an average, the vertical has contributed 35% and 40% to Siemens India's revenues and Ebit respectively over FY21 to FY24.
Siemens Energy India: Order Book
In the December 2024 quarter, Siemens Energy India had an order book of Rs 10,050 crore as of FY24. The company also received new orders worth Rs 8,800 crore during the fiscal.
Siemens Energy India: Financial Performance
As of FY24, the company's revenues were to the tune of Rs 6,280 crore, with Ebitda margins of around 15.7%. The company's bottom line stood at Rs 710 crore.
Growth Expected
As per IIFL Securities, energy revenues are forecasted to see a 24% compounded annual growth rate over FY24-27 due to the structural uptick in global transmission spread. Moreover, the favourable mix and pricing environment is expected to drive a strong uptick in the company's operating profit margins in FY25 to around 18%.
Jefferies expects the energy business to be a key beneficiary of the Rs 9.2 lakh crore transmissions capex pipeline. The brokerage also expects to see a 2 times EPS compounded annual growth rate for the business over FY24-27.
Price And Valuations
IIFL Securities expects a price band of Rs 1,650 to Rs 2,000 for Siemens Energy India. The brokerage's base case price target for the company is Rs 3,375. This indicates a price to earnings ratio of 45 times.
Jefferies values Siemens India Energy at 62 times FY27 price to earnings ratio. This puts the stock's valuations at a 13% discount to Hitachi Energy. The brokerage's implied price target for the stock stands at Rs 3,743. This suggests a 32% upside for the stock, based on its implied listing price, as per Jefferies.
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