Capital goods cos` sales to grow by 3.5% in Q1: P Lilladher

Prabhudas Lilladher has come with its June quarterly earning estimates for capital goods sector. According to the research firm, capital goods companies are expected to grow by 3.5% YoY in Q1FY13.

Prabhudas Lilladher Q1FY13 Result Preview for Capital Goods sector:

Over the last three months, the Capital goods index has outperformed the broader markets by ~5%. We expect sales for our coverage universe to grow by 3.5% YoY in Q1FY13. EBITDA margins are expected to be at 11.1% and PAT is expected to degrow by 4.9% (excluding Suzlon) for the quarter.

CMIE data on new project announcement continues to show a declining trend. Increase in projects shelved also point to a weak outlook in the near term. New investment announcements fell to Rs2.6trn in March 2012 quarter (down 26% YoY) v/s Rs2.2trn in December 2011 quarter (down 30% YoY) v/s Rs2.5trn in September 2011 quarter (down 32% YoY) v/s Rs3.1trn in June 2011 quarter (down 44% YoY). The number of projects shelved also continues to be high at Rs1.5trn in March 2012 (up 237% YoY) v/s Rs1trn in December 2011 quarter (up 267% YoY) v/s 1.9trn in September 2011 quarter from Rs479bn in June 2011 quarter. Average value of projects shelved in the last three quarters stands at ~1.5trn, a rise of 2-3x over the previous seven quarters which is a worrying sign. This is among the highest in the last 15 years.

The imposition of import duty would have been a definite positive for domestic manufacturers like BHEL, L&T, BGR, Thermax etc. as it would have improved competitiveness in terms of price. We believe it is too late in the day as 93GW of capacity is already under construction. The bigger issue today is order finalization from the private players which is standstill due to issues like land, coal and SEB finances.

 

                                                  (Rs in million)

	Q1FY13E	Q1FY12	YoY gr. (%)
BHEL
Sales	71,620	71,257	0.5
PAT	7,322	8,156	-10.2
Power Grid Corporation
Sales	32,531	22,025	47.7
PAT	9,815	7,053	39.2
ABB
Sales	17,777	16,930	5
PAT	403	387	4
Cummins India
Sales	11,460	10,453	9.6
PAT	1,473	1,257	17.2
Crompton Greaves
Sales	26,769	24,377	9.8
PAT	1,060	777	36.4
Thermax
Sales	8,850	10,444	-15.3
PAT	728	799	-8.9
Voltas
Sales	14,274	13,458	6.1
PAT	642	734	-12.5
Suzlon Energy
Sales	49,938	43,800	14
PAT	-1,998	600	-432.9
BGR Energy Systems
Sales	7,591	7,312	3.8
PAT	432	503	-14
KEC International
Sales	11,550	10,225	13
PAT	319	331	-3.6
Kalpataru Power
Sales	6,152	5,827	5.6
PAT	275	336	-18.3
Jyoti Structures
Sales	6,810	6,377	6.8
PAT	228	262	-12.8