Capital
Goods Stocks Outlook for the week – 05 to 09.01.2015
( www.rupeedesk.in )
Stocks of most capital goods companies are seen trading with a
positive bias next week, tracking the broader market and in anticipation of pick-up in
execution cycles as well as order inflow. Jan-Mar is a fundamentally strong quarter for the sector as
order finalisation, especially from public sector companies or the government, picks up.
Largely, capital goods players belonging to the power sector are
heavily relying on government orders, as capex of private sector companies is likely to remain muted
for few more quarters. Yesterday, Bharat Heavy Electricals secured a 38.1-bln-rupee order
from the Telangana government. In addition to this, the company along with other major
power equipment makers like L&T, Alstom and Thermax is in fray for two more orders from state-owned
power producer NTPC. This includes 70 bln-rupee-orders for NTPC's Khargone plant and
the boiler-turbinegenerator tender for the Barethi power plant. Both these tenders are likely to
be finalised by March or early April.
On the other hand, short cycle product companies such as engine maker
Cummins and Kirloskar Oil Engines are also likely to perform well on account of pre-buying
ahead of the summer season.
