Capital goods players have emerged as the shining stars of the equity market in the recent past. Thanks to the government’s emphasis on infrastructure development, these players have seen tremendous growth in their order books. The subsequent softening in interest rates after the pandemic buoyed their balance sheets as well. Analysts believe order books will remain healthy in the run-up to the general elections, and expect this to be reflected in the firms’ bottom lines
The BSE Capital Goods index climbed 48 per cent in the past year compared to the BSE Sensex’s 23 per cent gain. Suzlon Energy, Hindustan Aeronautics and CG Power, that are part of the BSE Capital Goods index, have surged more than 100 per cent in the past year
The share of capital expenditure in the Union Budget has almost doubled in the past 10 years. 45% is the expected growth rate of state capex in FY24 compared to 14.8 per cent in FY23, according to Nuvama Research
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For the second year in a row, the top line of listed capital goods players in FY23 remained above pre-Covid-19 levels
Larsen & Toubro (L&T) contributed the most to the total order book of capital goods players in FY23. Other prominent companies to feature in this list included Bharat Heavy Electricals Limited (BHEL), Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Forge
The consolidated profit of capital goods companies exceeded Rs 30,000 crore in FY23, the first time in five years
Profits of capital goods companies have improved compared to the interest outgo
The size of the order book of capital goods firms stands at 2.5 times as against trailing 12 months’ sales, which gives strong revenue visibility going ahead, according to IIFL Research