Capital goods cos eye steady road for H2

Most capital goods, engineering, and infrastructure companies have seen a sharp rise in their share prices in 2023, with the sectoral index surging 46% so far this year. This is primarily due to the government's focus on infrastructure development in the run-up to the general elections.

- Dipti Sharma

The increased focus on government-backed capital expenditure, primarily directed towards sectors like railways, power, and defence, has spurred investor interest and fuelled optimism in these industries.

Not surprising that foreign portfolio investors have also shown a keen interest in capital goods companies amid the current scenario. As per the data on institutional flows in October, foreign portfolio investors have bought more shares of industrials, while there was a significant selling in shares of financials, according to a note by ICICI Securities on 22 November.

Capital goods companies are expected to maintain stable revenue growth in the second half of FY24 due to successful order backlog execution, while steady commodity prices may boost earnings.