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Informist, Friday, May 8, 2026

MUMBAI – Stock-specific reactions are expected for capital goods companies next week as the March quarter earnings season is in full swing. While the BSE Capital Goods index has risen recently after being range-bound for around two years, it is expected to move in a range or even face selling pressure amid the risk of lower margins owing to higher crude oil prices.

The US-Iran war has caused some hit to margins of capital goods companies with Larsen & Toubro missing its margin guidance for the financial year 2025-26 (Apr-Mar). While the impact was limited in the March quarter, the company's management said it expects projection execution to be affected in the near term because of the war. Larsen & Toubro has substantial exposure to West Asia.

The company gave conservative guidance for FY27 with margins seen range-bound. This pushed several brokerages to cut their estimates for the next few years. Some even downgraded the stock's rating. "We think rising commodity prices could lead to significant delay in domestic tendering to awarding activities," Nomura said in a report after L&T's earnings. "Public tenders have a cost estimate by the tendering authority that does not reflect current prices. In a high commodity inflation environment, the lowest bids may well be in excess of 20% of authority-estimated costs. Under such circumstances, public authorities typically reassess these bids or rework them, leading to delays in bid awards."

Motial Oswal Financial Services said margins of capital goods companies that are part of its coverage came down on year during the March quarter. "The fourth quarter is typically the strongest execution quarter for companies across the capital goods and defense sector. Most capital goods companies reported healthy YoY (year-on-year) growth in profitability, although execution witnessed some deferments towards the end of Mar'26 amid the ongoing West Asia conflict," the brokerage said in a strategy report Friday. "Management commentaries highlighted near-term challenges arising from commodity inflation, elevated logistics costs, and geopolitical disruptions impacting supply chains, which in turn affected execution timelines and margins."

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* Siemens gets internal order to make, supply equipment worth INR 18.25 bln
* KSB's consolidated net profit for Jan-Mar falls 23% YoY to INR 398 mln

Following are the resistance and support levels for key capital goods stocks for next week as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anshul Choudhary

Edited by Rajeev Pai

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