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Trading in shares of capital goods and engineering companies is seen mixed as investors are likely to cherry-pick shares of sector bellwether Larsen & Toubro and Thermax over others such as Crompton Greaves. L&T will report Apr-Jun earnings on Monday. The company's is seen posting a net profit growth of just 3% on year in the quarter, at 8.90 bln rupees. Net sales are seen at 134.24 bln rupees, up 12% on year.
We expect L&T to clock standalone revenue of around 136 bln (rupees) in 1QFY14 (Apr-Jun), a 14% yoy (year-on-year) growth. Revenues would flow largely from heightened execution in the engineering and construction (E&C) vertical.
The engineering and capital goods company's order booking is largely expected to be in line with its order intake guidance for 2013-14 (Apr-Mar). In May, the company's management had guided for an order intake guidance of 20% growth on year. Investors will be keenly eyeing management comments on order pipeline, overseas order intake and operating margins.
Energy and environment engineering solutions provider Thermax too is likely to report a healthy order intake and stable margins. We expect fresh order intake to be around Rs 11.5 bln. We expect margins to be maintained at 9.5% due to cost control measures adopted by the company. Barring these two companies, the earnings of most other capital goods companies are likely to be subdued.
We expect the capital goods sector to report a subdued performance for 1QFY14 (Apr-Jun) following weak order inflow, tepid execution and sustained
compression in margins. New order inflow - key growth driver for the industry - remained lukewarm as industrial capex activity is yet to pick up in the economy.
Trading in shares of capital goods and engineering companies is seen mixed as investors are likely to cherry-pick shares of sector bellwether Larsen & Toubro and Thermax over others such as Crompton Greaves. L&T will report Apr-Jun earnings on Monday. The company's is seen posting a net profit growth of just 3% on year in the quarter, at 8.90 bln rupees. Net sales are seen at 134.24 bln rupees, up 12% on year.
We expect L&T to clock standalone revenue of around 136 bln (rupees) in 1QFY14 (Apr-Jun), a 14% yoy (year-on-year) growth. Revenues would flow largely from heightened execution in the engineering and construction (E&C) vertical.
The engineering and capital goods company's order booking is largely expected to be in line with its order intake guidance for 2013-14 (Apr-Mar). In May, the company's management had guided for an order intake guidance of 20% growth on year. Investors will be keenly eyeing management comments on order pipeline, overseas order intake and operating margins.
Energy and environment engineering solutions provider Thermax too is likely to report a healthy order intake and stable margins. We expect fresh order intake to be around Rs 11.5 bln. We expect margins to be maintained at 9.5% due to cost control measures adopted by the company. Barring these two companies, the earnings of most other capital goods companies are likely to be subdued.
We expect the capital goods sector to report a subdued performance for 1QFY14 (Apr-Jun) following weak order inflow, tepid execution and sustained
compression in margins. New order inflow - key growth driver for the industry - remained lukewarm as industrial capex activity is yet to pick up in the economy.
