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● We expect the capgoods sector in aggregate to report 20%
growth in sales (base effect driven), with flattish YoY margins.
While we have modeled the 20% growth in order inflows for the
sector, we expect downside to these numbers as order
finalisations in the power equipment sector (BTG, BOP and T&D)
have not been very encouraging this quarter.
● On the industrial front, short cycle order inflows should be strong
this quarter as highlighted by CGL and Siemens managements in
our meetings last quarter. Industrial project activity and large infra
order finalisations still remain weak.
● Companies such as BHEL, BGR Energy, ABB, Voltas and Areva
T&D should disappoint on order expectations, in our view. Since
1Q is considered a seasonally weak phase for order, we believe it
is likely though that order disappointments may not have an
impact on stock prices.
● On the earnings front, accounting changes could benefit some
companies and this could also create huge disparity with expected
numbers, more so because the impact of accounting changes
made last year by BHEL, Suzlon (method of consolidating
Repower) will not be separately quantified. Cummins may include
profit on the sale of the exhaust business this quarter
● Broadly, we expect BHEL, Siemens (base effect led), KEC and
Havells to report strong numbers. CGL, Thermax, Cummins,
BEML and Suzlon should report in-line numbers, whereas ABB,
Areva T&D, Punj Lloyd, BGR Energy and Voltas should report a
weak quarter.
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