Capital Goods Q4 Results Preview - Execution, Margin To Be Key Monitorables: Motilal Oswal

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.There has been a moderation in order inflows in Q4 FY24 owing to the impending election cycle. However, for key verticals such as renewable energy, power transmission and distribution, defense, railways, metro and water, order inflows have been steady overall in FY24 thanks to the government’s continued thrust on capex. On the private side, investment activity has been selective, primarily in areas such as data centers, real estate, cement, metals and mining, industrial automation, and PLI-led capex. Green shoots are visible and the ordering momentum is expected to gather steam in the post-election period and is resulting in valuation re-rating for the entire sector. We believe that strong order books of the companies should provide healthy revenue visibility. We expect 15% YoY growth in execution in Q4 FY24. Supply chain issues that had affected previous quarters may continue to weigh on execution over the next couple of quarters, with the Red Sea crisis being a key monitorable. We expect engineering, procurement and construction companies – Larsen and Toubro Ltd., KEC International Ltd., and KPIL – to see a gradual margin expansion as their low-margin legacy projects are near completion. We expect product companies to pass on lower raw material price benefits to end-users. As a result, we expect a ~25 basis points YoY contraction in Ebitda margin for our coverage universe. In Q4 FY24, we estimate our coverage companies to report revenue growth of 15% YoY, Ebitda growth of 13% YoY, and profit after tax growth of 5% YoY..Our top picks ABB India Ltd., L&T, and Kirloskar Oil Engines Ltd. remain our top picks in the sector. We expect ABB to be the key beneficiary of an improved addressable market for short-cycle orders from the private sector as well as transmission, railways, data center, and PLI-led spending. We expect L&T to continue to benefit from both domestic and international spending, along with control over its working capital. We like Kirloskar Oil because of its attractive valuations and as it has further scope of re-rating from current levels..Click on the attachment to read the full report:.Cement Q4 Results Preview - Robust Volume Growth; Weak Cement Prices Led To Earnings Cut: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Capital Goods Q4 Results Preview - Execution, Margin To Be Key Monitorables: Motilal Oswal

We remain positive on long-term prospects for the sector

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Capital Goods Q4 Results Preview - Execution, Margin To Be Key Monitorables: Motilal Oswal

We remain positive on long-term prospects for the sector

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