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Informist, Tuesday, Jun. 9, 2026

 

By Rajesh Gajra

 

MUMBAI – The March quarter earnings performance of the capital goods companies on the Nifty 200 index was mixed, with the aggregate net profit, adjusted for exceptional items, narrowly meeting analysts' expectations and the aggregate top line exceeding estimates. But the performance easily surpassed the Street's estimates on both adjusted net profit and revenue of the Nifty 200 index companies.

 

Adjusted for exceptional items, the aggregate net profit of the 17 capital goods companies from the Nifty 200 index for the March quarter increased 12.3% on year, barely meeting market expectations of 12.6% growth. The aggregate revenue growth of these companies was 18.2% on year, surpassing analysts' estimate of 15.8% growth.

 

The adjusted net profit growth for the capital goods companies was 2.6 times the expected 4.7% growth in the net profit of Nifty 200 companies. The 17 companies' revenue growth of 18.2% was also above the index companies' revenue growth estimate of 13.7% for the March quarter.

 

The 12.3% March quarter adjusted net profit growth of these capital goods companies was the lowest in six quarters, and much lower than the 44% growth in the trailing quarter and 21% rise in the same quarter a year ago. At 18.2%, these companies' net sales growth for the March quarter was the highest in five quarters. Their aggregate top line had grown 15.4% in the trailing quarter and 10.5% in the year-ago quarter.

 

The financial performance of the capital goods sector was considerably swayed by engineering major Larsen & Toubro Ltd., whose consolidated net sales for the latest quarter accounted for 53% of the aggregate net sales of the 17 companies analysed. L&T's consolidated net profit for the March quarter made up 41% of the aggregate net profit of the companies.

 

For the March quarter, L&T missed the Street's estimate on net profit and barely met the sales estimate. The engineering behemoth reported a consolidated adjusted net profit growth of 4.7% on year for the March quarter, much lower than the expected 10%, and its consolidated revenue increased 11.3%, meeting the Street's view of 11.4% growth.

 

Excluding L&T, the other 16 capital goods companies saw their aggregate net profit, adjusted for exceptional items, rise 18.3% on year, surpassing the analysts' estimate of 14.6%. The aggregate revenue of these 16 companies jumped 27% on year, higher than the analysts' expectation of 21.4%.

 

Including L&T, among the 17 capital goods companies analysed, six missed analysts' estimate on their respective net profit growth for the March quarter, nine surpassed it, and two were in line. In terms of net sales, four companies missed analysts' estimates, seven surpassed them, and six were in line.

 

Seven capital goods companies underperformed and 10 companies outperformed, against the 12.3% net profit growth expected from the sector for the March quarter. On net sales, six companies missed the sectoral estimate, two were in line, and nine surpassed it.

 

As many as 11 of the 17 capital goods companies also outperformed the Street view of 4.7% growth in net profit for the Nifty 200 index companies, while five underperformed and one was in line. On net sales, five companies were laggards, two were in line, and 10 surpassed the estimate for the index.

 

CONTRIBUTING FACTORS

The fact that the 17 capital goods companies' adjusted net profit grew by a lower rate of 12.4% compared to their aggregate revenue growth of 18.2% was slightly unusual. In the previous five quarters, the net profit growth had outpaced the revenue growth for these companies.

 

Some key factors led to a weak net profit performance of the companies analysed for the March quarter. A decline of 1.6% on year in aggregate other income was a contributory factor, with other income recording a decline after six consecutive quarters of increases.

 

But more importantly, the aggregate cost of materials consumed jumped 29% on year in the March quarter, the highest rise in seven quarters. The materials cost accounted for 34% of the aggregate revenue during the quarter.

 

The aggregate purchases of stock-in-trade also rose substantially by 25% on year, the highest in 11 quarters. Further, there was a large rise of 28% on year in the aggregate operating expenses of the companies analysed, again the highest in 11 quarters. The operating expenses made up for a significant 24% of the aggregate revenue.

 

LAGGARDS, OUTSHINERS

Of the six companies whose reported March quarter net profit growth lagged analysts' expectations, ABB India Ltd. and Rail Vikas Nigam Ltd. were the worst laggards. ABB India reported a 25% on-year fall in net profit, excluding exceptional items, for the March quarter. This was in sharp contrast to analysts' expectation of an 18% rise in the company's net profit. 

 

This was mainly due to ABB India's weak revenue growth of 5.8% and a surge of 11% in cost of raw materials, components consumed and project bought outs. Meanwhile, Rail Vikas Nigam's adjusted net profit fell sharply by 43% on year, against analysts' estimate of 9.3% growth, mainly due to operating expenses rising more than the revenue growth. 

 

On the other hand, among the nine companies whose March quarter net profit surpassed the Street view, Bharat Heavy Electricals Ltd. and KEI Industries Ltd. surpassed estimates by the largest margins. BHEL's adjusted net profit jumped 2.5 times on year, surpassing analysts' estimate of a 55% rise, while KEI Industries reported a 26% rise in net profit, excluding exceptional items, much higher than the Street expectation of 8% growth.

 

In terms of net sales, of the four companies that missed analysts' estimates, ABB India was the worst laggard. It reported revenue growth of 5.8% on year, against analysts' expectation of 14.1% growth, amid lower orders from railways and metros, metals and mining, energy, chemicals, and food and beverage as compared to the year-ago quarter. In the case of Supreme Industries Ltd., the revenue increased 16.5%, missing the Street view of 22% revenue growth.

 

Of the seven companies whose revenue growth surpassed analysts' estimates, BHEL, Polycab India Ltd., and Hitachi Energy India Ltd. were the best outperformers. Polycab India reported revenue growth of 27% on year, higher than the 18% growth estimated by analysts. Hitachi Energy India's revenue jumped 46% on year in the March quarter, surpassing analysts' expectation of 27% growth. BHEL's revenue grew 37%, higher than the Street expectation of 21% growth.

 

Challenges related to costs and bottom line growth are likely to persist for capital goods companies in the June and September quarters, according to analysts. But demand is likely to help these companies record higher top line growth in the near term.

 

The following table shows the March quarter performance of the 17 companies in the capital goods sector vis-a-vis analysts' average estimate for each company as well as against the average estimates for the sector and the Nifty 200 index on aggregate:

 

Company	PAT beat analysts' estimate	Adjusted PAT growth %	PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate	Net sales beat analysts' estimate	Net sales growth %	Net sales growth estimate %	Net sales beat sector estimate	Net sales beat Nifty 200 estimate
Capital goods sector		12.31	12.59				18.20	15.84
Nifty 200 index			4.68					13.70
ABB India	No	-25.23	18.10	No	No	No	5.78	14.10	No	Met
APL Apollo Tubes	Yes	20.89	16.81	Yes	Yes	Met	13.81	13.46	No	Met
Astral	No	22.20	39.08	Yes	Yes	No	24.21	28.64	Yes	Yes
Bharat Heavy Electricals	Yes	154.47	54.83	Yes	Yes	Yes	36.88	20.99	Yes	Yes
CG Power and Industrial Solutions	Yes	33.67	22.94	Yes	Yes	Met	25.03	23.29	Yes	Yes
Container Corp of India	No	-14.53	4.90	No	No	No	-1.08	1.98	No	No
Cummins India	Yes	18.49	7.15	Yes	Yes	Yes	22.56	16.03	Met	Yes
Hitachi Energy India	Yes	79.71	66.77	Yes	Yes	Yes	46.21	27.44	Yes	Yes
KEI Industries	Yes	25.50	7.96	Yes	Yes	Met	19.27	17.50	Met	Yes
Larsen and Toubro	No	4.67	9.97	No	Met	Met	11.25	11.39	No	No
Polycab India	Yes	6.34	-2.02	No	Yes	Yes	26.89	17.99	Yes	Yes
Premier Energies	Yes	64.44	40.04	Yes	Yes	Met	37.60	37.12	Yes	Yes
Rail Vikas Nigam	No	-43.14	9.26	No	No	Met	4.78	4.94	No	No
Siemens	No	-9.56	5.52	No	No	Yes	14.60	11.20	No	No
The Supreme Industries	Yes	47.17	38.00	Yes	Yes	No	16.54	22.00	Yes	Yes
Tube Investments of India	Met	-64.88	-62.66	No	No	Yes	16.42	11.90	Yes	No
Waaree Energies	Met	70.34	74.78	Yes	Yes	Yes	111.80	89.05	Yes	Yes

 

End

 

Edited by Avishek Dutta

 

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