Capital goods companies ABB India and Siemens were the top gainers on the Nifty MNC index on March 27, rising 6 percent and 4.6 percent on institutional buying. ABB India hit a 52-week high of Rs 6,341.90 and so did Siemens at Rs 5,360.
The Nifty MNC index has 30 companies in which the foreign promoter shareholding is more than 50 percent.
Capital goods, which have 21.51 percent weightage, led the gains in the Nifty MNC index during the day.
Zero-debt capital goods multinational stocks have largely outperformed the Nifty. Various government initiatives towards incremental capex spending have aided the growth.
The S&P BSE Capital Goods index has gained over 8 percent, while the benchmark Nifty has risen 2 percent this year, so far.
Also Read | Debt-free capital goods MNCs outperform Nifty on capex boosters
In a research report on March 22, Anand Rathi identified ABB India and Siemens as key beneficiaries of the unfolding macro themes and ongoing capex. The brokerage house picked Cummins for a “buy” tag, while Siemens and ABB have a “hold” call.
The public capex, expectation of pick up in private capex and sustainable demand for premium products should see a ABB’s standalone revenue, EBITDA, and PAT to grow at 23 percent, 24 percent, and 23 percent CAGR over CY23-CY26, it said.
"We expect ABB to expand its EBITDA margin to 14.6 percent by CY26 (from 14.3 percent in CY23), chiefly on the persistent trend of premiumisation, value-based selling and better absorption of fixed costs on higher utilisation," it said.
Power transmission and distribution, urban infrastructure, and railways have seen robust demand. Anand Rathi said that railways has seen record investments, creating perfect conditions for pulling in private investments.
Siemens, for example, saw its order book at an all-time high of Rs 45,500 crore aided by a Rs 26,000 crore order from the Indian Railways to supply 1,200 electric locomotives of 9,000 HP with a service period of 35 years.
Multinationals are either ramping up capacity or setting up plants to transform India into an export hub for their global supply chains, the report said.
Small industries moving up to mid-size and mid-size to large is aiding the momentum in the capex cycle, which is expected to be driven by core and new-age industries with impetus from public and private spending, the brokerage said.
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