Capital Goods Stocks Outlook for the week – 25 to 29.05.2015

Capital Goods Stocks Outlook for the week – 25 to 29.05.2015
 Seen volatile amid Jan-Mar earnings
Stocks of capital goods companies are seen volatile next week as a number of them will be detailing their Jan-Mar earnings. Thermax, Crompton Greaves, Cummins India, Suzlon Energy, and Blue Star are among the big companies in the sector which will announce their earnings next week, with sector bellwether Larsen & Toubro detailing its Jan-Mar numbers on May 30.

Crompton Greaves is seen reporting a consolidated net profit of 794 mln rupees for Jan-Mar, up 24% on year, and net sales of 38.64 bln rupees. We expect the company's overseas business to show distinct signs of recovery, but currency movement is seen as a key factor. Engines and generator maker Cummins India is likely to report double-digit sales and profit growth as to strong exports.

Cummins India is seen posting a net profit of 1.57 bln rupees, up 11% on year and net sales of 11.09 bln rupees, up 16% on year. We expect strong exports (low horse power and medium horse power engines) to more than offset the weakness in domestic business. Investors will be eyeing Jan-Mar earnings of Suzlon Energy, as this will be the first quarterly results following the investment of Sun Pharmaceutical Industries promoter Dilip Shanghvi in the company. Clarity on debt management and the domestic sales outlook will be keenly awaited from the Suzlon management.