Siemens India share price took a significant hit on December 20, 2024, with a 9% drop in midday trading. The sharp decline followed a disappointing earnings call where Siemens revealed that private sector capital expenditure (capex) had failed to show any meaningful growth. This news raised concerns among investors, especially as it was coupled with a slowdown in traditional technology investments. In this article, we will discuss the factors behind the drop in Siemens India share price and explore what it means for the company’s future prospects.
What Caused the Drop in Siemens Share Price?
Private Sector Capex Shows No Growth
One of the primary reasons for the drop in Siemens share price is the sluggish growth in private sector capex. During the earnings call, Siemens confirmed that there was no significant pickup in private sector investments, which dampened investor sentiment. While sectors like semiconductors, electric vehicles, and solar photovoltaics are seeing positive investment, traditional industries such as automotive and metals are experiencing stagnation.
Slower Investment in Traditional Technologies
Siemens also pointed to a slowdown in investments in traditional technologies, which further contributed to the decline in its share price. The company disclosed that it was not participating in the Line-Commutated Converter (LCC) segment, which is vital for high-voltage direct current (HVDC) systems. However, Siemens remains active in the Voltage Source Converter (VSC) segment, although the numbers in this area have yet to make a material impact on its financials.
Broader Market Impact
The drop in Siemens India share price had a ripple effect on the broader market. Shares of ABB India also saw a decline of nearly 4% on the same day. The market reaction underscores the widespread concern about slow private sector investments and its potential impact on the industry.
Signs of Recovery in Manufacturing and Government Spending
Despite the challenges, Siemens highlighted some positive trends. While government infrastructure spending has been slower in the first half of FY25, there are expectations of a pickup in the second half. Additionally, the manufacturing Purchasing Managers’ Index (PMI) showed a rebound in October, after hitting a nine-month low. This rebound is expected to drive growth in the manufacturing sector, which had been sluggish in recent months.
Siemens also pointed out an increase in demand for energy transmission and efficiency solutions, indicating some recovery in the market. The company expects its fourth-quarter new orders to grow by 20.9% year-on-year, signaling potential growth in the coming quarters.
Siemens Share Price Outlook: A Long-Term Growth Story
While the Siemens India share price has recently dropped, it is important to note that the company has performed well on a year-to-date basis. Siemens shares have increased by 75% in 2024, reflecting its solid financial position. The company’s market capitalization currently stands at Rs 2.55 lakh crore, highlighting its strong market presence.
Looking ahead, Siemens is preparing for the demerger and listing of Siemens Energy in 2025. This move is expected to open new avenues for growth, and investors are hopeful that the demerger will help unlock value and provide long-term growth opportunities.
Conclusion: Should You Invest in Siemens?
Despite the recent decline in Siemens India share price, the company remains well-positioned for long-term growth. The anticipated recovery in government spending and the manufacturing sector, coupled with Siemens’ focus on emerging energy solutions, suggests that the company could see a rebound in the near future. Investors should monitor the trends in private sector capex and traditional technology investments, as these factors will continue to influence Siemens’ stock performance.
Siemens’ strong year-to-date performance and the expected demerger of Siemens Energy provide optimism for its future growth. For those watching the Siemens share price, these developments are critical to understanding the company’s trajectory moving forward.
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