Capital Goods Stocks Outlook
Seen higher on hopes of pick-up in govt capex
This story was originally published at 20:43 IST on 22 November 2024
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MUMBAI – Shares of capital goods companies are seen higher as expectations of a pick-up in government spending is likely to help these companies report growth in their December quarter earnings. However, high valuations of mid-cap and small-cap companies in this sector remain a hurdle, say analysts, and may cap the upside for several stocks.
Motilal Oswal Financial Services, in a report Friday, said it expects order inflows to these companies to improve with the seasonally weak period and disruptions due to state elections behind us. "Margins for EPC (engineering, procurement, and construction) players are expected to ramp up from 2HFY25 (Oct-Mar) as newer orders booked at favourable prices come up for execution and input costs remain stable," it said.
The brokerage is largely positive on companies dependent on domestic demand, while its outlook on exports is mixed. There is robust traction in West Asia and Africa, but developed countries are seeing an impact due to geopolitical tensions, weak macroeconomic conditions, and political transition, the brokerage said.
Goldman Sachs said it is positive on order inflows for power-related industrial companies, but a high base for other players will affect the overall growth in order books. "As these orders continue to get executed over the next few quarters, revenue growth will remain stable. We expect valuations to correct for the broader industrial sector," the brokerage said Thursday in a report detailing its outlook for 2025.
The BSE Capital Goods index rose over 2% this week after declining for two straight weeks. The sectoral index closed at 67417.28 points. Among its constituents, shares of Suzlon Energy rose nearly 15% this week, and those of Praj Industries rose 13%. Most of the gains in shares of Praj Industries came on Friday after the company said it expects to triple its revenues by 2030. The company is looking at opportunities in various sectors, including sustainable aviation fuel, biopolymers, and energy transition and climate actions to help drive revenue growth.
TOP HEADLINES
* Praj Ind eyes tripling of revenue on back of new opportunities by 2030
* India Bond Placements: Ashoka Buildcon seeks bids for 3 bonds on Mon
* BEML wins INR 2.5 bln order from Central Coalfields to supply 48 dump trucks
* RITES signs MoU with National Institute of Solar Energy
* PTC Industries Jul-Sept consol PAT doubles on year to INR 173.1 million
* EID Parry Jul-Sept consol PAT falls 32.4% YoY to INR 3.06 billion
Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Bharat Heavy Electricals | 234.39 | 4.80 | 241.80 | 223.10 |
| CG Power and Industrial Solutions | 730.05 | 5.00 | 751.30 | 697.40 |
| Larsen & Toubro | 3603.50 | 2.20 | 3703.80 | 3423.00 |
| Siemens | 6849.40 | 1.70 | 7150.50 | 6498.50 |
| Thermax | 4488.70 | (-)10.30 | 4656.90 | 4244.90 |
| Bharat Electronics | 280.85 | (-)0.00 | 288.00 | 272.00 |
| S&P BSE Capital Goods | 67417.28 | 2.10 | 68654.80 | 65175.90 |
| Nifty 50 | 23907.25 | 1.60 | 24337.90 | 23143.70 |
| S&P BSE Sensex | 79117.11 | 2.00 | 80512.20 | 76529.20 |
End
Reported by Anshul Choudhary
Edited by Rajeev Pai
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