Industrial capital goods companies will see good growth, says IIFL

Renu Baid, vice president - research at IIFL Institutional Equities, spoke to CNBC-TV18 about the quarterly earnings so far and shared her outlook on the capital goods sector.

“If you look from a visibility perspective, companies today have reasonably strong backlog which provides visibility for the next 12-18 months. In fact, the momentum that we have seen for the last couple of quarters, we see that momentum sustaining in terms of execution picking up. So domestic execution headwinds, which were there with respect to write-off issues and clearances on site and payments, we have seen those easing out."

"So in fact, this quarter also we expect most companies to show double-digit growth in revenues sector reporting close to about 15 percent growth in revenues coming through and this is a combination of both, infrastructure-led spending from the government side as well as a good mix of short cycle orders coming through in the core industrial segment which was the piece which was lagging in the last one to one and a half year,” Baid said on Thursday.

Talking about the industrial sector growth, Baid said, “Within the industrial, most of the companies which manage standard products like motors, abrasives, those companies will be growing in double digit terms. Also, the spending on digitalisation and efficiency upgrade related programmes which is happening on the corporate side, that is helping most of the multinational companies here, ABB, Siemens to drive the digitisation related revenues there. So the automation robotic businesses will be growing between 20 percent and 30 percent. We see those trends improving quarter-on-quarter (Q-o-Q) for the last two-three quarters in a row now. So all these categories would be growing well. If we see most companies are strengthening their network and base in the market. These are all demand coming in from the base market itself. So not driven entirely by large orders or projects, which you have in the pipeline".