Why is Siemens Ltd. falling/rising?

Recent Price Movement and Market Context

Siemens Ltd. has experienced a downward trajectory in recent trading sessions, reversing gains from the previous two days. The stock underperformed the Capital Goods sector, which itself declined by 3.33% on the day. Intraday, the share price touched a low of ₹2,992, marking a 4.54% drop from the previous close. Notably, the weighted average price indicates that a greater volume of shares traded near this lower price point, signalling selling pressure.

Further technical indicators reinforce this bearish sentiment, with Siemens trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day marks. This suggests a sustained negative momentum in the stock’s price action.

Underperformance Against Benchmarks

Over the past week and month, Siemens has lagged behind the Sensex, declining 2.66% and 6.08% respectively, compared to the Sensex’s more modest falls of 1.18% and 1.08%. Year-to-date, the stock is down 1.74%, slightly worse than the Sensex’s 1.22% decline. Most strikingly, over the last year, Siemens has delivered a negative return of 18.52%, while the Sensex gained 7.72%. This stark underperformance highlights investor concerns about the company’s near-term prospects.

Fundamental Challenges and Valuation Concerns

Despite Siemens Ltd.’s strong market position as the second largest company in its sector with a market capitalisation of ₹1,11,466 crores, the company has faced headwinds in profitability. The latest quarterly results for September 2025 revealed a 19.2% decline in profit after tax (PAT), which stood at ₹484.90 crores. This contraction in earnings has weighed heavily on investor sentiment.

While the company boasts a healthy long-term operating profit growth rate of 18.56% annually and maintains a low debt-to-equity ratio averaging zero, these positives have not offset concerns about recent earnings weakness. The return on equity (ROE) of 13.6% is respectable but is accompanied by a high price-to-book value of 8.1, indicating that the stock is trading at a premium valuation. Although this valuation is somewhat discounted relative to its peers’ historical averages, the price-earnings-to-growth (PEG) ratio of 1.5 suggests limited upside given the current earnings trajectory.

Sector and Investor Activity

The Capital Goods sector’s decline of 3.33% on the day has compounded Siemens’ share price weakness. However, investor participation in Siemens shares has increased, with delivery volumes rising by 27.44% on 07 Jan compared to the five-day average. This heightened activity, coupled with liquidity sufficient for trades worth ₹1.79 crores, indicates that while selling pressure dominates, the stock remains actively traded.

Long-Term Performance and Outlook

Over a longer horizon, Siemens Ltd. has delivered robust returns, with a 77.30% gain over three years and an impressive 210.25% increase over five years, outperforming the Sensex’s respective gains of 40.53% and 72.56%. This demonstrates the company’s capacity for sustained growth despite recent setbacks.

Nevertheless, the recent earnings decline and the stock’s underperformance relative to the broader market and sector peers have led to a cautious stance among investors. The flat results in the latest quarter and the negative profit growth of 18.2% over the past year have undermined confidence, reflected in the stock’s price correction.

In summary, Siemens Ltd.’s share price decline on 08-Jan is primarily attributable to disappointing quarterly earnings, expensive valuation metrics, and broader sector weakness. While the company’s long-term fundamentals remain solid, near-term challenges have prompted investors to reassess their positions, resulting in the current downward pressure on the stock.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →