Shares of Siemens slipped 10 per cent to Rs 3,338 on the BSE in Monday’s intra-day trade on the back of heavy volume after the company's board on Friday approved the sale of low voltage motors and geared motors businesses to Siemens AG subsidiary -- Siemens Large Drives India -- for Rs 2,200 crore.
Despite today’s sharp decline, thus far in the calendar year 2023, Siemens has outperformed the market by surging 20 per cent. In comparison, the S&P BSE Sensex was up 1.2 per cent during the period. In past one year, the stock has rallied 43 per cent, as against 14 per cent rise in the benchmark index. It had hit a record high of Rs 3,940 on May 12, 2023.
The board of directors of Siemens has approved the sale and transfer of low voltage motors and geared motors businesses, including related customer service business to Siemens Large Drives India Pvt Ltd, an entity wholly-owned by Siemens AG, for a consideration of Rs 2,200 crore with effect from October 1, 2023, a company statement said.
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The transaction is subject to fulfilment of conditions precedents agreed upon between the parties, including receipt of requisite shareholders, statutory and regulatory approvals, as applicable, it added.
For FY22, the Business accounted 7 per cent or Rs 1,061 crore of revenue from operations and 9 per cent or Rs 132 crore profit from operations.
The board of directors has also decided to consider the distribution of 100 per cent of the sale consideration as reduced by applicable Capital Gains Tax, and any other applicable taxes, if any, on the transaction, as a special dividend, at the first board meeting after completion of the proposed transaction.
Meanwhile, in a separate exchange filing, Siemens in a step to address the fast-growing demand for electric vehicle (EV) charging infrastructure in India, the company signed an agreement to acquire the EV division of Mumbai-based Mass-Tech Controls Pvt Ltd.
The division is engaged in the design, engineering and manufacturing of a wide range of AC chargers, and 30 to 300kW capacity DC chargers for various end applications for EVs.
The purchase consideration is Rs 38 crore on a cash-free and debt-free basis and subject to other adjustments that are mutually agreed between the parties to the transaction, it stated.
Analysts at Prabhudas Lilladher believe that this acquisition will help to address fast-growing demand for EV charging infrastructure in India, expand local market presence, enable creation of exports hub and scale up its range of e-mobility solutions.
The brokerage firm remains positive on Siemens from a long-term perspective given its strong and diversified presence, product localization, focus on cost efficiencies and recent large order wins in mobility business. “We revise our estimates by -6.1 per cent/-5.5 per cent for SY24/25 (Sep’ yearend), owing to re-adjustment for slump sale of LV motors business. Maintain ‘Accumulate’ rating on the stock with revised target price of Rs 4,018 (Rs 4,254 earlier), valuing it at 57X Sep’25,” the brokerage firm said in analysts meet update.