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Stocks of most capital goods and engineering companies are seen rangebound in the absence of any signs of significant near-term uptick ordering in the domestic market. Media reports said the Indian government may to allow Chinese power equipment manufacturers to set up service centres in India. While this move is unlikely to give Chinese companies a backdoor entry to source equipments for ultra mega power projects, it will further increase their competitiveness. Earlier, power equipment bought from Chinese companies were required to be shipped back to them for repair, which was an additional cost for the customers. So far, Chinese companies have provided power equipment used in all the four ultra mega power projects that have been awarded. Ultra mega power projects are those having capacity to produce more than 4,000 MW. Shares of capital goods and engineering major Larsen & Toubro Ltd, which reported a healthy net profit and net sales growth for Jul-Sep last week, is seen as a preferred pick of investors in the sector. With its diversified operations across geographies and verticals and an 1.76-trln-rupee-strong order book, L&T is likely maintain its growth momentum despite the sluggish domestic demand environment. Investors are largely seen bearish on shares of Bharat Heavy Electrical Ltd due to exposure to domestic power sector. "We reiterate 'SELL' with a potential earnings decline due to an inadequate backlog, slower execution and margin pressure. BHEL shares are seen trading with support of 105 and resistance of 145 rupees.
Stocks of most capital goods and engineering companies are seen rangebound in the absence of any signs of significant near-term uptick ordering in the domestic market. Media reports said the Indian government may to allow Chinese power equipment manufacturers to set up service centres in India. While this move is unlikely to give Chinese companies a backdoor entry to source equipments for ultra mega power projects, it will further increase their competitiveness. Earlier, power equipment bought from Chinese companies were required to be shipped back to them for repair, which was an additional cost for the customers. So far, Chinese companies have provided power equipment used in all the four ultra mega power projects that have been awarded. Ultra mega power projects are those having capacity to produce more than 4,000 MW. Shares of capital goods and engineering major Larsen & Toubro Ltd, which reported a healthy net profit and net sales growth for Jul-Sep last week, is seen as a preferred pick of investors in the sector. With its diversified operations across geographies and verticals and an 1.76-trln-rupee-strong order book, L&T is likely maintain its growth momentum despite the sluggish domestic demand environment. Investors are largely seen bearish on shares of Bharat Heavy Electrical Ltd due to exposure to domestic power sector. "We reiterate 'SELL' with a potential earnings decline due to an inadequate backlog, slower execution and margin pressure. BHEL shares are seen trading with support of 105 and resistance of 145 rupees.
