5 Capital Goods Stocks To Buy With Healthy Balance Sheet & Long-Term Scalability

Prabhudas Lilladher has come out with its latest report on the capital goods sector. According to the brokerage house its capital goods coverage universe to report healthy revenue growth in Q3FY23, owing to strong opening order books, execution pickup, normalizing supply chain situation and continued demand from domestic as well as key export markets.

Stocks to buy from the capital goods space by Prabhudas Lilladher

Company name	Ratings	CMP	Target price
Apar Industries	Buy	1174.9	1834
Bharat Electronics	Buy	98.75	125
Engineers India	Buy	78.9	89
L&T	Buy	2069	2384
Triveni Turbine	Buy	246.6	328

Good order inflows

According to Prabhudas Lilladher order inflows are likely to remain healthy in Q3FY23, owing to continued traction in new edge sectors (data center, digitalization, energy efficiency etc.) and private capex picking up. In domestic market, tendering activities continue to remain
healthy from sectors such as defense, T&D, water, railways etc., while exports enquiries remain strong from countries such as SAARC, Middle East, Africa and US. During the quarter, L&T announced order inflows of Rs 215-365 bn, while T&D EPC companies such as KEC announced inflows worth Rs74 bn and Kalpataru announced inflows worth Rs 39.3 bn.

Product companies to grow revenue

According to Prabhudas Lilladher, product companies revenue to grow by 23.4% YoY (~24% YoY ex-BHEL) led by decent volume growth in domestic and export markets, along with likely price hike and favorable business mix. EBITDA margins for most product companies are likely to improve on back of price-pass through, softening commodity prices & freight cost and product mix. "We continue to prefer companies with strong balance sheet, good corporate
governance, well managed working capital and long-term scalability. Our top picks in the sector are BEL, ABB, Siemens, L&T," Prabhudas Lilladher has said.

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.