5 Engineering Stocks You Can Buy Next Week

Markets have been trading range bound for the last few weeks. The next big event for the markets would be the Union Budget 2023. Here are some stocks that are recommended as a "buy" by Emkay Global.

Stocks to buy from the engineering space

Name	Current market price	Target price
Action Construction	318	345
HG Infra	662	820
Kalpataru Power	517	615
KEC	485.7	505
L&T	2153	2215

Decent orders

According to Emkay Global, after slow ordering during Oct-Nov '22, the sector has managed to end 3QFY23 with a decent 20% YoY growth and 14% 4-yr CAGR in ordering. Ex Roads, awards saw 19% growth on 4-yr CAGR basis. Importantly, poor awarding in the Roads sector continued in 3QFY23 as well. "Power (both, generation and T&D sub segments), Water supply, Irrigation and Railways remained the key sectors of growth. Two large mining contracts were awarded in Dec-22 - one to Essel Mining (Rs276bn) and the other to Adani Enterprises (Rs 186 bn)," says Emkay Global.

Momentum in orders sustains

According to the brokerage, tenders logged a 4-year CAGR of 18% during 3QFY23 as against 14%/13% for Q2FY23/Q1FY23. Tenders excluding roads were even robust, at 21% on 4-year CAGR basis. "Power T&D, Water supply, Railways and Irrigation have trailed a strong growth trajectory in the current fiscal. Strong growth in Power T&D is also backed by orders on the smart metering front. The tenders-to-awards conversion rate (ex-Roads) stood at 45% during 3QFY23 vs 38% YoY. During Oct-Nov '22, it clocked at 30% and, hence, Dec-22 saw decent improvement," the brokerage has said.

Stocks from the engineering space that are top picks of Emkay Global

"We maintain our positive view on Larsen and Toubro (Target price: Rs 2,215 per share), KEC (Target price: Rs505 per share), KPTL (Target price:Rs 615 per share), ACE (Target price: Rs345 per share) and HG Infra (Target price: Rs 820 per share), with a BUY on all. Overall, we uphold our constructive view on the sector, driven by its strong tender pipeline, softening commodity prices and expectation of good order inflow growth," the brokerage has said.