Capital goods companies are expected to benefit from the transition to newer sources of energy and subsequent decarbonization of the economy, besides a pick up in exports and public/private spending, said Institutional Equities Research, HDFC Securities. “Capital good companies have witnessed strong order bookings until now, with recession fears looming; sentimentally, the global orders may see some softening,” it said in a report on Saturday.
In domestic markets, it expects the recovery to continue, driven by both government and private capital expenditure. Notably, the central government is particularly focusing on capital expenditure to build long-term infrastructure.
“In the near-to medium-term, decarbonization as a theme is driving brownfield capex while greenfield capex recovery is picking up. In the long term, we expect global political realignment to result in lagged impact on global supply chain resets, with India emerging as an alternative manufacturing pole for global markets.” Also, MNCs are increasingly expanding capacities in India in order to cater to domestic as well as global demand.
“The share of exports in the order book and revenue is increasing, with good demand support from Indian corporates,” the report by Institutional Equities Research said. In that context, L&T and Cummins India are two top picks among capital goods. In the infra space, Kalpataru, HG Infra, KNR, PNC, and NCC are the top picks. (ANI)
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