Stock Markets Today: Larsen & Toubro, ABB, Siemens, and other stocks have shown significant gains ranging from 50% to 103% over the past year. Siemens’ share price has more than doubled, while GE T&D India Ltd and Hitachi Energy have seen remarkable increases of 111% to 631%.
Foreign Portfolio Investors (FPIs) have played a crucial role in bolstering these gains, showing strong confidence in Capital Goods stocks amidst a positive outlook. Despite being net sellers of equities worth over $3 billion in May, FPIs have made net equity investments totaling $723 million in the sector this year, as per NSDL data.
Order flows and effective execution have been pivotal in maintaining a bullish outlook for capital goods companies. Analysts attribute this to the government’s focus on capital expenditure over the past couple of years, which has triggered a sustained rally in the sector. Strong execution has also contributed to earnings surpassing expectations in Q4FY24, supported by margin growth due to lower input prices.
Motilal Oswal Financial Services highlighted healthy earnings growth in the Capital Goods sector in their Q4 review report, providing further momentum to overall corporate earnings.
Industrial multinational corporations (MNCs) like ABB, Siemens, Cummins, Honeywell, GE T&D, and Hitachi Energy have maintained robust trading multiples, driven by strong order inflows both domestically and internationally over the past few years.
Looking ahead, analysts at Nuvama Institutional Equities anticipate a continued momentum in order inflows for Power Transmission and Railroads in FY25, potentially leading to a revaluation of earnings for companies such as ABB, Siemens, CG Power and Industrial Solutions, and Hitachi Energy. With RBI’s capacity utilization at a multi-year high of over 75%, signaling the beginning of a private capital expenditure cycle, prospects for the sector remain positive.
Analysts’ top picks from the sector include BHEL, Hitachi Energy, CG Power, and Kalpataru Projects, as recommended by Nuvama Institutional Equities. They also favor companies like Data Patterns, APAR Industries, Schneider Electric, and BEML, although these are not actively covered by them.
Disclaimer: The views and recommendations expressed are those of individual analysts or broking companies and not of Legal Parivar. Investors are advised to consult certified experts before making any investment decisions.
