Glimmer of hope

While capital goods makers are seeing a revival in demand, it still may be a little too early for investors to join the party

While a volatile market is the new normal as we enter the election season, it brings good tidings for sectors directly related to the economy. In a bid to accelerate growth and create jobs, the government is pumping a lot of money into the infrastructure sector. And one of the biggest beneficiaries of the government’s infrastructure thrust is the capital goods sector, which is finally showing signs of a rebound.

As the demand for heavy equipment increases, a precursor for pickup in business activity, capital goods maker Siemens India, ABB India, Thermax and Cummins Indiawere able to beat sales and operating income estimates in the quarter ended September 2018.  According to Jefferies report, the capital goods makers reported the strongest growth in 28 quarters. “Our coverage universe saw 20% YoY revenue growth after 27 quarters of the sluggish trend. The EBITDA margins and order flows during the first half of FY18 touched a five-year high,” says Lavina Quadros of Jefferies. 

In fact, th


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