Shares of Siemens climbed 1.3% to hit an all-time high of ₹2,849 in intraday trade on Wednesday, in an otherwise muted session for the broader market. The share price of the industrial manufacturing company has been gaining for the last three sessions and has risen nearly 9% during this period, as compared to a 1.2% gain in the BSE Sensex. Driven by the recent rally, Siemens’ market capitalisation (m-cap) crossed ₹1 lakh crore marks in the intraday trade, joining the league of companies such as Tech Mahindra, Indian Oil, Dabur India, Divi’s Lab, and Grasim Industries.
Paring some of the early gains, Siemens share price settled the day’s trade at ₹2,805, down 0.2%, with a market cap of ₹99,891.73 crore. The stock has surged 44% from its 52-week low of ₹1,973.15 touched on August 11, 2021.
Siemens shares have risen 6.7% in the last one week, more than 5% in a month, and 19% in the past one month. In the last one year, the largecap stock has given 37% returns to its shareholders and 19% in the calendar year 2022 (year-to-date basis). The counter currently trades higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.
The recent surge in Siemens shares can be attributed to recent developments and decent June quarter earnings. Brokerages also remained bullish on the stock, citing strong focus on technology leadership in digitisation and automation products to further strengthen its market share. The strong order books and demand for short cycle products also augur well for the stock.
The automation company, a subsidiary of German multinational conglomerate Siemens AG, in an exchange filing on August 5 said that it made an investment of ₹1.14 crore in Mumbai-based Sunsole Renewables as part of the second tranche equity allotment. In October last year, the engineering firm had signed an agreement to acquire a 26% equity stake in Sunsole to procure renewable energy to reduce its carbon footprint for its Kalwa facility.
For April-June quarter of the current fiscal, Siemens reported more than two-fold growth in its consolidated profit at ₹300.7 crore as compared to ₹141.8 crore a year ago, mainly on account of higher income. The company, which follows the October-September financial year, posted a total income of ₹4,337 crore in Q3 FY22, up 50% from ₹2,889 crore in the same period last year.
“For the third quarter of the financial year ended June 30, 2022, new orders from continuing operations stood at ₹4,992 crore, registering a 20% increase over the same period last year. The company’s order backlog from continuing operations stands at an all-time high at ₹17,856 crore,” Siemens said in its earnings report released on August 2.
Commenting on Q3 earnings, Sunil Mathur, Managing Director and Chief Executive Officer, Siemens Limited, said, “The strong performance was across all our businesses and included a significant order in our mobility business. While we are currently not experiencing a slowing down in public and private capex spending, we are concerned about global headwinds impacting demand which could result in a slowdown in Capex spending.”
Post- June quarter earnings, domestic firm ICICI Direct Research gave a ‘Buy’ call on the stock, with a target price of ₹3,040, a potential upside of 65 from the current market price. The time period given by the analyst is 12-18 months, citing that the company is well placed to gain from the overall energy market transformation from electrification to automation, and digitisation.
“A 20% growth in order book with order backlog at an all-time high at | 17856 crore is seen improving growth visibility, going ahead. However, global headwinds may impact demand, which could result in a slowdown in capex spending,” the agency said in a report dated August 4.