Shares of Siemens Ltd. hit an all-time high on Monday after the board of directors authorised the management to commence exploratory steps for potential demerger of the company's energy business into a separate entity.
The decision by the board of directors comes after the company's promoters requested the board to consider, evaluate and begin taking exploratory steps towards the demerger of the company, according to an exchange filing
The promoters making the request include Siemens Aktiengesellschaft, Germany, Siemens International Holding BV and Siemens Energy Holding BV, and Siemens Energy Aktiengesellschaft.
The company said the potential demerger would be subject to further consideration and deliberation by the board of directors.
The board also approved the immediate incorporation of a wholly-owned subsidiary in Mumbai. This subsidiary may be required if and when the board approves the implementation of the demerger.
Jefferies identified Siemens as one of the top picks from the industrial sector in a Dec. 17 note.
Siemens' stock rose as much as 8.64% during the day to Rs 4,245 apiece on the NSE. It was trading 6.65% higher at Rs 4,167.05 apiece compared to a 0.17% decline in the benchmark Nifty 50 at 1:49 p.m.
The share price has risen 50.01% on a year-to-date basis. The total traded volume so far in the day stood at 3.4 times its 30-day average. The relative strength index was at 82, indicating that the stock may be overbought.
Seventeen out of the 26 analysts tracking Siemens have a 'buy' rating on the stock, three recommend 'hold' and six suggest 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 42.6%.
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