Siemens Limited

Management expressed a positive outlook on the Indian economy, expecting 6.5% growth for FY25. However, global geopolitical uncertainties and increasing trade tensions are disrupting supply chains and adding complexity to business. While private sector CapEx remains muted, public CapEx, particularly in power utilities, railways, metros, and water, continues to drive growth. Emerging verticals like electronics, semiconductors, batteries, and data centers also show sustained investment, with major players continuing their CapEx plans.

Siemens Limited reported a 2.5% revenue growth in Q2 FY25, with a healthy Book-to-Bill ratio of 1.25 and an order backlog of ₹415 billion, up 7.2%. Overall EBITDA was on track at 12.5%. However, reported Profit Before Tax (PBT) declined by 37.6% to ₹5.9 billion in Q2 FY25, and PAT declined by 37.1%. This was primarily due to an extraordinary gain^📎 of ₹192 crores in Q2 FY24 and ₹63 crores in demerger expenses incurred in Q2 FY25. Excluding these one-off^📎 items, underlying PBT declined by 11%.

The Digital Industries segment is undergoing a normalization cycle globally, with H1 order growth at 1.2% and Q2 order growth at 6.1% (₹9.5 billion). Revenue in Q2 was flat YoY at ₹10 billion. The segment's EBITDA margin dropped significantly due to demand normalization, muted private sector CapEx, increased import prices, and changes in product/channel mix. Management noted that inventory levels are normalizing, and they are beginning to see the first signs of channel partners ordering, but it's considered too early to celebrate a full return to growth.

The Smart Infrastructure business demonstrated consistent growth, with orders increasing by almost 14% in Q2 and 11% in H1. Revenue grew by 6.6% in Q2 and 6.8% in H1. The segment's EBITDA margin improved from 15.3% in H1 FY24 to 16.3% in H1 FY25, driven by product mix and stringent execution. C&S Electric, acquired in FY21, continues to grow profitably and contribute positively to this segment's performance, particularly in exports which saw double-digit growth.

The Mobility segment saw a significant surge in H1 orders, reaching ₹24.2 billion, an increase of almost 300% YoY compared to ₹6.1 billion in the previous year. This included a significant ₹7.7 billion order for 9K HP locomotive maintenance. Q2 revenue was ₹7.4 billion, though H1 revenue was slightly down by 3.0% due to normal project delivery cycles. The 9000 HP locomotive project is on track, with homologation underway and mass production expected to ramp up from 5 to 20 to 60, and eventually 100 locomotives per year within three years.

The Low Voltage Motors (LVM) business continues to face a weak market with declining new orders (6.9% in Q2, 6.6% in H1) and price pressure. While Q2 revenue grew by 6%, the year-to-date EBITDA margin was 7.8%, down 130bps YoY. Following the sale of the global Innomotics business by Siemens AG to KPS Capital Partners, Siemens Limited will now explore options for the future of its LVM business, acknowledging its dependency on technical support from the global Innomotics business.

The Siemens Energy demerger was completed on March 1, 2025, with ₹25 billion in cash transferred to the Energy business as part of the allocation. Post-demerger, Siemens Limited aims to significantly increase its export share from the current 12% to 20% within three to five years, primarily driven by Smart Infrastructure and Mobility. The company is actively localizing production and adopting global technology, such as in the 9000 HP locomotives, to support this export strategy and leverage India as a global sourcing hub.