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Capital goods (CG) companies, excluding Larsen & Toubro (L&T), reported a significant surge in order inflows during the second quarter of FY25, reaching Rs 79,300 crore, a staggering 182% increase compared to the same period last year. This surge was driven primarily by substantial contracts secured by Hindustan Aeronautics, totaling Rs 26,000 crore for the supply of 240 AL-31FP engines, and Bharat Heavy Electricals Limited (BHEL), which garnered Rs 21,000 crore in the power equipment sector. Excluding these two major contracts, overall order inflows still exhibited robust growth at 20% year-on-year, according to an Elara Securities report.In terms of sector-specific performance, inflows to defence firms soared threefold to Rs 35,200 crore, while non-defence inflows increased by 125% year-on-year to Rs 44,100 crore. Key drivers for these orders included power generation, transmission and distribution (T&D), water management, defense projects, and engineering, procurement, and construction (EPC) services.
Sales expected to rise 14%
Elara Securities projects that sales growth across the CG coverage universe will reach 14% year-on-year in Q2 FY25E, supported by strong industrial demand and effective execution backed by a robust backlog. Notable performances are expected from ABB India and Siemens, with anticipated revenue increases of 15% and 18%, respectively, driven by effective backlog execution.
Other companies are also expected to see positive growth; Thermax is predicted to achieve a 15% revenue increase due to improved performance in industrial products and green solutions. Cummins is expected to grow 7% year-on-year as it transitions to new gensets. KEI Industries may report a 17% revenue increase fueled by infrastructure demand in wires and cables, alongside rising copper prices.
On the defense front, Bharat Dynamics is forecasted to see a 5% decline in sales due to ongoing supply chain issues, while Garden Reach Shipbuilders & Engineers anticipates a 42% revenue rise, leveraging peak execution in its project pipeline.
Consumer electricals, electronics maintain momentum
The consumer electricals, durables, and electronics sectors are projected to continue their growth momentum, with expected revenue growth of 35% year-on-year in Q2 FY25E. This growth is attributed to increasing localization in electronics manufacturing services, ongoing demand for room air conditioners, and pre-festival stocking in the durable goods sector.
Voltas is expected to achieve a 19% revenue increase driven by volume growth in room air conditioners. Amber Enterprises may see a 25% rise, supported by its components business, while Kaynes Technology forecasts a 60% revenue spike due to strong industrial demand and a healthy order book. Dixon Technologies anticipates an impressive 91% revenue growth, thanks to robust sales in mobile devices and recent acquisitions.
Havells India expects an 11% increase in revenue, driven by demand in lighting and appliances, while Polycab is projected to grow 24% due to strong demand in wires and cables. Eureka Forbes anticipates a 12% revenue rise, driven by higher volume growth.
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