The Siemens stock is under pressure because brokerages are wary of the company's latest acquisition of C&S Electric.

Renjith Sivaram of ICICI Securities said it seems to be an ineffective utilisation of cash on the books. “We believe that Siemens had cash balance of close to Rs 5,000 crore, so in that perspective, the back of the envelope calculation tells us that the product portfolio of C&S should generate around 17-18 percent ROE."

In terms of valuation, if we assume similar to that of Schneider- L&T then Siemens has not overpaid for it. However, would like to wait and watch for the of the kind of synergies they can extract from this acquisition, said Sivaram.

Talking about acquisition cost, where Siemens seems to have used over 40 percent of the cash, Sivaram said, “No, in fact cash will only going to increase for Siemens going forward because their focus has been on short cycle orders and this acquisition, fits into their long term strategy to focus more on short cycle orders product business rather than the EPC kind of business where there are lots of headwinds in terms of Power Grid slowing down and your overall thermal utility space is impacted by the macro headwind. Therefore, this acquisition perfectly fits into their strategy to focus on short cycles, cash flows and predictable businesses.

"I beg to differ a bit from the thought that this is not an effective utilisation of the cash,” said Sivaram.

He also added, “Given the Schneider acquisition of L&T, I believe this acquisition by Siemens helps them to improve their presence in segments where they are not strong and probably they can work out some synergies and improve their market share. So, something can be worked out between the both.”