Capital goods index hits new peak in weak market; L&T, Timken at new highs

Thermax rallied 12 per cent to Rs 1,503 after it reported 183 per cent year-on-year jump in its consolidated profit after tax

Shares of engineering, capital goods and infrastructure companies were in focus on Thursday with the S&P BSE Capital Goods index hitting a new high in an otherwise weak market on expectation of improved outlook.

Larsen & Toubro (L&T), Grindwell Norton and Timken, for instance, hit their respective record highs on the BSE in the intra-day trade today.

Further, Thermax rallied 12 per cent to Rs 1,503 after the company reported 183 per cent year-on-year (YoY) jump in its consolidated profit after tax (PAT) at Rs 88 crore for the quarter ended September 2021 (Q2FY22). The stock had hit a 52-week high of Rs 1,569.70 on June 8, 2021. The company said, in this quarter, Thermax Babcock and Wilcox Energy Solutions (TBWES), a wholly owned subsidiary of Thermax, has concluded a Rs 293 crore order for a boiler package comprising three Oil & Gas fired boilers on an EPC basis for a refinery and petrochemical complex in western India.

At 11:33 am, the S&P BSE Capital Goods index, the largest gainer among sectoral indices, was up 0.73 per cent, as compared to a 0.84 per cent decline in the S&P BSE Sensex. The index hit a record high of 29,057 in the intra-day trade today.

Thus far in the month of November, the S&P BSE Capital Goods index has outperformed the market by surging 9 per cent, as against a 0.88 per cent gain in the S&P BSE Sensex.

This comes amid a pick up in project tendering activity in Q2FY22 with 22 per cent YoY growth. Overall tendering grew 5 per cent YoY during H1FY22. Roads, Power Distribution and Power Equipment sectors saw strong growth during the quarter, while Real Estate and Water saw a decline in tendering.

"Road tenders continued to drive the bulk of the activity in this space (31 per cent of H1FY22), followed by Water Supply and Railways, which contributed 8-11 per cent. During the quarter, a good number of orders were tendered by Bharat Broadband Network Ltd," Emkay Global Financial Services said in sector update.

Shares of L&T hit a fresh record high of Rs 1,964, up 1.7 per cent in intra-day trade, surpassing its previous high of Rs 1,964 touched on Tuesday, November 9, 2021. In the past one month, the stock gained 15 per cent, as against 0.5 per cent decline in the Sensex.

Considering robust tendering pipeline, ordering activity will continue its growth momentum in the coming quarter. Analysts at Prabhudas Lilladher believe that L&T is well-placed to benefit from pickup in economic activity and private capex given its financial, technical & managerial capability for sustaining and gaining market share.