Siemens AG to buy 18% stake in JV Siemens India for ₹18,968 cr

Heavy electrical equipment major Siemens India Ltd’s (SIL) shares surged 4% today after Siemens AG announced that it'll buy an 18% stake in its India joint venture from Siemens Energy AG. The proposed acquisition is valued at ₹18,968 crore (2.1 billion euros or $2.28 billion), which represents a 15% discount based on the average price. "The company will sell 18% of its stake in Siemens India Ltd (SIL) to Siemens AG for €2.1 billion... the proceeds are based on the share price of SIL (volume weighted average price (VWAP) on the last 5 trading days prior to the conclusion of the agreement)," says a stock exchange filing by the company.

Siemens shares are currently trading 2.21% up at ₹3,493.9 on the BSE at a market capitalisation of ₹1,24,424.86 crore. For the third quarter of Financial Year 2023 ended June 30, 2023, Siemens Ltd registered profit after tax (PAT) at ₹424 crore, an increase of 43.4% over the same period last year. Revenue was at ₹4,407 crore, a 14% increase YoY.

The government of Germany has also given its nod to extend loan guarantees to the wind farm maker Siemens Energy AG as a part of a financial package worth 15 billion euros, which will help it continue its green energy initiatives.

"In addition to securing the guarantee facilities to safeguard its own growth, Siemens Energy is strengthening its balance sheet," the company says.

When Siemens Energy AG was established in 2020, Siemens India Ltd was not yet unbundled for administrative reasons. Siemens Energy currently still 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 adds.

The company says the partial sale has no impact on Siemens Energy’s operations in India. "These will continue to the same extent as before under a supplementary agreement. India remains a strategically important growth market for Siemens Energy, in which the company continues to invest. Nothing will change for Siemens Energy's customers."

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.

Siemens Energy AG also announced its financial results on November 15. The company's revenue increased by 9.9% on a comparable basis to €31.1 billion, with all segments apart from Siemens Gamesa contributing to this growth. Siemens Energy says its profitability, however, was severely impacted by the large loss at Siemens Gamesa. The net loss of Siemens Energy for the period stood at €4,588 million.

In its outlook for fiscal year 2024, Siemens Energy says overall, it expects comparable revenue growth, excluding currency translation and portfolio effects, in a range of 3% to 7% against 7.3% in FY2023.