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Stocks of capital goods and engineering companies are seen trading with a negative bias in the coming sessions on concerns of likely weak quarterly earnings. Sector-leader Larsen & Toubro will report Oct-Dec earnings on Thursday while ethanol plant equipment provider Praj Industries will report earnings on Monday. Praj Industries is expected to post a net profit of 200 mln rupees, down 7.2% on year, and revenue of 2.30 bln rupees, up 5.1%. Despite the company's stagnant order book of 8 bln rupees, going forward it we expects the company to benefit from the 5% mandatory blending of ethanol in petrol and revision of ethanol prices. Larsen & Toubro, which received orders worth around 98 bln rupees in Oct-Dec, is likely to meet "its annual inflow guidance".
On the other hand, power plant equipment makers Thermax, BGR Energy Systems, and Bharat Heavy Electricals are seen reporting weak Oct-Dec earnings on account of sluggish order inflow. As visibility of the order book declines the valuations of these companies will continue going down. Around 30-35% orders of power plant equipment companies are on hold and hence are at a risk of being downgraded. Ordering activity remains sluggish, particularly in the industrial/power generation segment. Ordering by Power Grid Corporation has also been muted during Q3FY13 (Oct-Dec). In Oct-Dec, Power Grid Corp released orders worth 43 bln rupees as compared to 74 bln rupee orders last year.
Stocks of capital goods and engineering companies are seen trading with a negative bias in the coming sessions on concerns of likely weak quarterly earnings. Sector-leader Larsen & Toubro will report Oct-Dec earnings on Thursday while ethanol plant equipment provider Praj Industries will report earnings on Monday. Praj Industries is expected to post a net profit of 200 mln rupees, down 7.2% on year, and revenue of 2.30 bln rupees, up 5.1%. Despite the company's stagnant order book of 8 bln rupees, going forward it we expects the company to benefit from the 5% mandatory blending of ethanol in petrol and revision of ethanol prices. Larsen & Toubro, which received orders worth around 98 bln rupees in Oct-Dec, is likely to meet "its annual inflow guidance".
On the other hand, power plant equipment makers Thermax, BGR Energy Systems, and Bharat Heavy Electricals are seen reporting weak Oct-Dec earnings on account of sluggish order inflow. As visibility of the order book declines the valuations of these companies will continue going down. Around 30-35% orders of power plant equipment companies are on hold and hence are at a risk of being downgraded. Ordering activity remains sluggish, particularly in the industrial/power generation segment. Ordering by Power Grid Corporation has also been muted during Q3FY13 (Oct-Dec). In Oct-Dec, Power Grid Corp released orders worth 43 bln rupees as compared to 74 bln rupee orders last year.
