Despite reporting weaker-than-expected Q2 results, Siemens (SIE:IN) shares have surged over 4% today. This unexpected market reaction has left investors and analysts pondering the reasons behind the stock's upward trajectory. While the company's consolidated net profit fell 7% year-on-year to ₹485 crore, and another source mentioned a 42% drop to ₹4.85 billion, its revenue from operations grew 16% to ₹5,171 crore. This revenue growth, driven by strong performance in the Mobility and Smart Infrastructure segments, appears to be a key factor influencing investor sentiment.
Several analysts have weighed in on Siemens' performance and future prospects. Nomura/Instinet upgraded Siemens' stock rating from "Reduce" to "Neutral," raising its price target to INR3,325.00 from INR2,780.00. This upgrade was prompted by Siemens' Q4 fiscal year 2025 results, which revealed a 16% year-over-year revenue growth that surpassed both Nomura's estimates and Bloomberg consensus expectations. The Mobility segment's 29% growth and Smart Infrastructure's 20% increase significantly contributed to this revenue surge.
JM Financial noted that Siemens' topline exceeded estimates by 8%, although the Ebitda beat was a more modest 5% due to demerger-related costs. They also pointed out that order inflows remained strong at 10%. Motilal Oswal, while reiterating a "Neutral" rating, acknowledged Siemens' revenue beat but trimmed future margin assumptions due to weaker-than-expected margins. Antique Stock Broking is positive on Siemens, noting the company's shift towards becoming a technology-focused entity and its advantageous position to capitalize on the ongoing capital expenditure cycle.
The positive sentiment from analysts like Nomura, JM Financial, Motilal Oswal and Antique Stock Broking, coupled with the impressive revenue growth, seems to be overshadowing the dip in net profit. Investors may be focusing on the long-term growth potential of Siemens, particularly in its Mobility and Smart Infrastructure businesses. Additionally, Siemens' large order backlog, which grew 6% year-over-year to ₹42,253 crore, provides a cushion against short-term profitability concerns.
Furthermore, Siemens' strategic expansion into energy technology and automation has fueled optimism in the market. The company's new partnerships and its position at the forefront of industrial innovation are attracting investors. A recent analysis indicated that Siemens is undervalued, further boosting investor confidence.
Despite a mixed Q2 performance, Siemens' strong revenue growth, positive analyst outlook, strategic initiatives, and large order backlog have converged to drive its stock price higher. While concerns about profitability and cost management persist, investors appear to be betting on Siemens' long-term growth story.
