Siemens stock crashes 10% to record biggest intraday fall since June. Here’s why | Stock Market News
Stock market today: Shares of Siemens, a major player in the heavy electrical equipment sector, fell 10% in trade on Friday, December 20, hitting a one-month low of ₹6,868 per share, following the company’s September quarter earnings call. The decline also marked the largest intraday drop since early June.
The company’s management stated that private capital expenditure (capex) has not picked up significantly across the board. While private capex remains strong in sectors like semiconductors and batteries, it continues to lag in traditional technologies, as reported by CNBC-TV18.
Further, the management noted that the energy business is experiencing strong demand in the transmission segment, driven by a shift towards renewables, with the HVDC (High Voltage Direct Current) segment expected to be a key growth driver moving forward.
However, Siemens clarified that it is not participating in LCC (Low-Cost Carrier) tenders in India or globally, although it remains active in the VSC (Voltage Source Converter) segment.
Siemens India’s digital industries business is currently facing challenges due to the ongoing semiconductor shortage and some destocking by customers, the report added.
Margins for the quarter within this segment have declined due to pricing pressures and an unfavourable product mix, according to the management, who also stated that the business is expected to recover in the coming quarters once the destocking process is completed.
Siemens manufactures and sells a range of products, including electric motors, generators, transformers, electricity distribution and control equipment, general-purpose machinery, and other electrical products, both in India and internationally. Siemens is a 75% subsidiary of Siemens AG, Germany, which operates in over 200 countries.
September quarter earnings snapshot
The company, which follows a financial year from October to September, reported its quarterly numbers in late November. For the period, it posted a revenue of ₹5,894 crore, reflecting an 11% increase compared to ₹5,297 crore in the same quarter last year. The company reported a profit before tax of ₹775 crore, up from ₹534 crore in the corresponding period of the previous year.
During the quarter, the company secured new orders worth ₹6,164 crore, with strong demand across all business segments. However, Digital Industries experienced a normalisation in demand. Excluding the large ₹9,000 HP electric locomotive order from Indian Railways received in FY 2023, new orders for FY 2024 increased by 14%, according to the earnings filing.
In addition, the company announced an additional capex of ₹100 crore for the capacity expansion of its power transformer factory at Kalwa. This expansion aims to enhance the product portfolio range. As a result, the total capex for the Power Transformer factory in Kalwa is now expected to be ₹460 crore, up from ₹360 crore previously announced.
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