Capital Goods Stocks Outlook for the week – 02 to 06.05.2016 Seen in range; Siemens earnings eyed

Capital Goods Stocks Outlook for the week – 02 to 06.05.2016

Seen in range; Siemens earnings eyed

 ( www.rupeedesk.in )

Stocks of capital goods companies are seen range bound, tracking the wider market and in the

absence of any sector-specific triggers. The Jan-Mar earnings season for the sector has started on a

negative note with ABB India reporting earnings below market view. Moreover, the engineering

company's order inflows remained tepid for the quarter and margins too came much below analysts'

estimates. While the management of the company is upbeat about future prospects in India, higher

valuations saw the company's share prices corrected. Stocks of the company have fallen 2.99% in

the last five trading sessions. Given the higher other expense and lower than expected growth, we

cut our earnings by 16% and 10% for CY16e (calendar year 2016) and CY17e (calendar year (2017).

Next week, Siemens Ltd will report its Jan-Mar earnings on May 6. The capital goods and engineering major is seen reporting net profit of 1.59 bln rupees, down 1.6% on year, and net sales of 27.57 bln rupees, up 6.5% on year. We expect flat to 7-8% revenue growth on the back of improved traction in product business.