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Business News/ Markets / Stock Markets/  L&T, Siemens, ABB, Thermax share prices rise up to 70% in a year. Should you Buy, Sell or Hold the capital goods majors?
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L&T, Siemens, ABB, Thermax share prices rise up to 70% in a year. Should you Buy, Sell or Hold the capital goods majors?

Stock market today: Larsen & Toubro, Siemens, ABB India, Thermax share prices have gained up to 70% in a year. The BSE capital goods index too is up 65% in a year having seen regular buying interest by Foreign Portfolio Investors. The strong order flows is driving this rally. Should you Buy or Sell?

Larsen & Toubro, Siemens , ABB India , Thermax share prices have gained up to 70% in a year (MINT_PRINT)Premium
Larsen & Toubro, Siemens , ABB India , Thermax share prices have gained up to 70% in a year (MINT_PRINT)

Larsen & Toubro, Siemens , ABB India , Thermax  share prices have seen strong run up on the bouses having gained up to 70% in a year. Bharat Heavy Electricals Share price has been a outlier having given multi bagger returns of 179% in a year to investors.

The Capital good companies have been gaining regularly with economic activity catching pace . The order flows have remained strong improving revenues and earnings outlook for capital good majors. 

Not surprising that Foreign portfolio investors have been regular buyers in the capital goods sector stocks for past many months, even though net inflows by Foreign portfolio investors have remained volatile in the Indian markets.

Also Read- Indian stock market to see $1.70 billion inflows on FTSE rejig; HDFC Bank top beneficiary

The S&P BSE capital Goods index is also up 65% in a year.

The capital goods companies had reported good earnings growth for the quarter ending December'2023. 

The Capital Goods companies under coverage of Yes securities reported another bumper quarter after Q2, with revenue and net profit growing 16% and 33% year-on-year , respectively and Ebitda margin expanding 230bps YoY. Order Inflow  were up 33% YoY and orderbook was up 28% YoY growing faster than revenues. 

As the new orders growth topped the execution rate for a third consecutive quarter given the uptick in long-cycle orders, analysts at Nuvama Institutional Equities said that Public capex momentum sustained across power generation, transmission and distribution , railways and defence while a secular uptick in private capex is likely in 12–18 months.

Also Read- Paytm share price hits 5% upper circuit after a nod by NPCI for third party application provider licence

The analysts at Jefferies India Pvt Ltd remain constructive on industrials sector as  Industrials and Infra capex should see 16% CAGR (compound annual growth rate in FY23-26 versus  6% in FY11-20 led by Power sector, Railways, PLI/metals, data centres and warehousing and logistics.  

The focus on many of these has been seen in interim budget and is likely to continue.

Analysts at Jefferies believe operating leverage should continue to drive earnings surprise for companies under their coverage as Siemens, Thermax, ABB, KEI Industries remain their top picks.  Jefferies remains positive on Larsen & Toubro (L&T) where core margin delivery as per them is needed for further rerating.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

 

 

 

 

 

 

 

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ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 15 Mar 2024, 01:49 PM IST
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