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Informist, Friday, Jul. 4, 2025

MUMBAI – Hopes of strong order inflow and high margins in capital goods companies are likely to support share prices in the near term despite high valuations, analysts said. Stocks in the sector are seen rising or moving in a range as there are no negative triggers.

"The last few quarters have clocked all-time high margins across product companies (ex-EPCs), which we believe can not only sustain but may even improve over time...," said Nuvama Institutional Equities in a report. Companies in the sector are expected to report their June quarter earnings later this month and next month.

Nuvama expects the current valuation multiple to be sustained owing to expectations of strong capital expenditure over the next few years. It said large ticket-size orders in some segments, including transmission and distribution, railways, and defence, have picked up pace.

Analysts expect capital expenditure, especially by the government, to pick up further in the current quarter. These expectations should also aid stock prices in the near term, analysts said.

Within the sector, defence companies are at a risk of profit booking owing to high valuations. These companies may also see some selling as investors shift to other sectors after a sharp runup in defence stocks, analysts said.

Earlier this week, Elara Securities downgraded Bharat Dynamics' rating to "sell" on high valuations and limited scope for further rise in margins. It also factored in a delay in the execution of Akash missiles, which is now expected to happen in 2025-26 (Apr-Mar) as compared wth its earlier expectations of FY25.

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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:

End

Reported by Anshul Choudhary

Edited by Saji George Titus

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