Back in February when most capital goods companies showed improved capacity utilisation, it pointed to early signs of turnaround for the sector. Now that belief has gathered more strength, thanks to a strong March quarter performance from ABB India and Siemens India. Even as their net profit took a hit due to change in accounting norms, the key takeaway was the eye grabbing growth in order inflows. For ABB India, the 28 per cent year-on-year (y-o-y) growth in order inflow came from power transmission and distribution (T&D) segment, while pockets such as renewable energy and railways also supported it. A similar case entails for Siemens India. The spike in order inflow (up 61 per cent year-on-year) in March quarter derives additional strength from cement, steel and automotive (construction equipment) sectors as for modernisation, maintenance and expansion is underway in these industries.
This has prompted a few analysts to believe that these could be early signs of turnaround in capacity expansion (capex) by India Inc. Edelweiss in a note dated May 15 says that the recovery in capex is pretty broad. However, unlike previous cycle which was benefitted by power generation, roads, metals and other infrastructure projects, the current leg of capex recovery encompasses sectors such as railways, oil and gas, defence and power transmission and distribution (T&D).
via Strong Q4 show by ABB, Siemens are early signs of capex recovery | Business Standard News
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