Siemens zooms 9%, hits all-time high on energy biz spin-off plan

Shares of heavy electrical equipment major Siemens Ltd surged 9% and hit a new lifetime high today after the company initiated the potential demerger of its energy business, and approved the incorporation of a wholly owned subsidiary in Mumbai, India.

Promoters of the company, Siemens Aktiengesellschaft, Germany, Siemens International Holding B.V. and Siemens Energy Holding B.V., and also Siemens Energy Aktiengesellschaft, the ultimate parent company of Siemens Energy Holding B.V., have each requested the Siemens Ltd board to consider, evaluate and start the process of a “potential demerger of the company’s energy business into a separate entity”.

"The BoD (Board of Directors), at its meeting held today, i.e., 18th December 2023, authorised the company’s management to commence exploratory steps as may be required to examine a potential demerger of the company’s energy business...further, the BoD has approved the immediate incorporation of a wholly owned subsidiary in Mumbai, India (“proposed subsidiary”), on the basis that the proposed subsidiary may be required if and when the board decides to implement the aforesaid demerger," Siemens says via a stock exchange filing.

The filing shows on December 11, 2023, promoter Siemens Energy Holding B.V., earlier known as Siemens Gas and Power Holding B.V., sold 6.4 crore equity shares of Siemens Ltd, around 18% stake, to Siemens Aktiengesellschaft, Germany. Both of them are promoters of Siemens Ltd.

Another promoter Siemens Energy Holco B.V. also proposed to buy 1.7 crore shares of Siemens Ltd, which amounts to a 5% stake. Promoter Siemens Aktiengesellschaft, Germany, also proposed to acquire 6.4 crore shares or an 18% stake of Siemens Ltd from another promoter Siemens Energy Holding.

Reacting to the news, Siemens India shares opened gap up at ₹3,915.40 on the BSE and surged to an intra-day high of ₹4,244.55, taking the company's m-cap higher to ₹1.47 lakh crore. At the current share price of ₹4,133, the company's scrip is trading 2.6% down as compared to a one-year high of ₹4,244.55, which was touched today. In the past week, month and six-month basis, the share price of Siemens Ltd has seen 6.38%, 14.76% and 8.08% upside. In the year-to-date and one-year periods, shares surged 45.51% and 39.29%, respectively.

Siemens AG had announced to buy an 18% stake in its India joint venture from Siemens Energy AG on November 15, 2023, valuing the proposed acquisition at ₹18,968 crore. When Siemens Energy AG was established in 2020, Siemens India Ltd was not yet unbundled for administrative reasons. Siemens Energy currently holds 24% of Siemens Ltd, India, while Siemens AG holds 51%. "This partial sale is a first step in the planned – and now accelerated – unbundling of Siemens Energy and Siemens AG in India," the company had said in November 2023. The partial sale will have no impact on Siemens Energy’s operations in India, it said.

Siemens Energy's India portfolio ranges from state-of-the-art compressors, turbines and generators to virtual power plants, intelligent grid management and innovative storage solutions. It operates in areas like power generation, renewable energy, services, industrial applications, storage solutions, and services for power transmission.