Capital Goods Stocks Outlook
High stock valuations may limit upside next wk
This story was originally published at 21:43 IST on 31 July 2026
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MUMBAI – Shares of capital goods companies are likely to move in a range next week amid elevated stock valuations, which could trigger profit-booking. Persistently high commodity prices are also expected to weigh on capital goods companies' margins, limiting any upside until crude oil prices ease.
"... major capital goods companies are already trading at rich valuations, which largely capture the upcoming inflow pipeline but which likely do not capture the margin threat," Elara Securities said in a report on Monday.
The brokerage pointed out that the competition from players from China is also affecting margins of companies in India. "For the past 3-4 years, entry barriers in the industry have reduced, and MNCs (multinational corporations) such as Nidec, Weg, ABB, and Lauritz Knudsen find it tough to sustain margins. Localisation is helping to offset this; however, raw material cost inflation and pricing pressure have created a difficult environment," it said.
This week, sector bellwether Larsen & Toubro Ltd.'s quarterly earnings show the impact of the war in West Asia. The company's earnings before interest, taxes, depreciation, and amortisation margin fell to 9.0% in the June quarter from 9.9% a year ago, indicating the impact of higher commodity prices and transportation costs.
While brokerages expect the September quarter also to be weak for L&T, the strong order book has given analysts confidence that the company will show better growth once disruptions due to the war end. Order inflows remained strong with the company's total order book at INR 7.79 trillion at the end of the June quarter, up over 27% from a year ago.
Several other companies in the sector faced margin pressure due to higher input costs. ABB India, which announced its earnings Friday, reported an EBITDA margin decline of 100 basis points on year to 12.6% for the June quarter.
TOP HEADLINES
* Kirloskar Brothers Apr-Jun consol PAT down a tad on year at INR 666 million
* Analyst Concall: Thermax to course-correct past errors, aim high order inflow
* L&T signs 6-year EPC agreement with Petroleum Development Oman
* Earnings Outlook: KEI Ind Q1 PAT seen up YoY on price hikes, steady volumes
* Earnings Review: Thermax Q1 PAT plunges 83% YoY on higher costs; misses view
* L&T gets limited notice to proceed with 1.6 GW thermal project from NTPC
* Analyst Concall: Price hikes to aid Dabur revenue Q2, co retains FY27 view
* Earnings Review: Syrma SGS Q1 PAT doubles to INR 1 bln, beats Street view
* MTAR Tech Apr-Jun consol PAT up over fourfold YoY at INR 502 million
* Earnings Review: Price hikes lift Dabur India Q1 PAT 15%, beats Street view
* Analyst Concall: Price hikes to aid Dabur revenue Q2, retains FY27 view
* Earnings Review: Syrma SGS Q1 PAT doubles to INR 1 bln; beats Street view
* Earnings Review: V-Guard Apr-Jun PAT rises 93% YoY, beats Street view
* L&T's onshore hydrocarbon vertical gets 'major' order from Kuwait Oil Co
* Inox Wind to supply wind turbine generators to NLC India for INR 16 bln
* Analyst Concall: L&T sees pick-up in project awarding activity in W Asia Q2
* Earnings Review: L&T Q1 consol PAT up 14% YoY, boosted by high other income
* L&T sees time delays in execution of some projects due to West Asia war
* Analyst Concall: Suzlon Energy keeps FY27 capex guidance of INR 7 bln unch
* Earnings Review: Suzlon Energy Q1 PAT falls more than expected
* L&T wins 'ultra-mega' order with TenneT for 2 GW offshore wind programme
* L&T bags project to build 26 high-rise residential towers in Mumbai
* Elgi Equipments extends timeline for capacity addition to Oct-Dec
The 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:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Bharat Heavy Electricals | 407.00 | (-)2.50 | 414.80 | 402.00 |
| CG Power and Industrial Solutions | 863.40 | (-)0.50 | 892.90 | 835.30 |
| Larsen & Toubro | 3,938.90 | 4.10 | 3,995.00 | 3,895.20 |
| Siemens | 3,760.00 | 1.90 | 3,889.80 | 3,597.20 |
| Thermax | 4,306.00 | (-)4.60 | 5,043.00 | 3,198.00 |
| BHARAT ELECTRONICS LTD | 387.85 | (-)4.20 | 393.40 | 382.20 |
| Index | Levels | |||
| S&P BSE Capital Goods | 77012.22 | (-)0.50 | 77947.70 | 75575.90 |
| Nifty 50 | 24383.60 | 2.60 | 24500.60 | 24241.20 |
| S&P BSE Sensex | 78094.64 | 2.70 | 78521.30 | 77596.60 |
End
Reported by Anshul Choudhary
Edited by Saji George Titus
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