Cap goods, engineering firms see new order wins worth Rs 2 trn in H1FY25

Industry sources estimate sluggish demand for cement, slow awarding for roads in the first half

The first half of the current financial year was robust for capital and engineering firms as they saw fresh order wins worth more than Rs 2 trillion, despite the election interval.

Awarding activity for others in the infrastructure space was a mixed bag, with a demand lull in cement and weak awarding activity for the roads sector.

The top five firms in the engineering space - Larsen & Toubro (L&T), Hindustan Aeronautics, Bharat Heavy Electricals (BHEL), KEC International, Kalpataru Projects International (KPIL) – have disclosed combined fresh orders worth Rs 2.04 trillion, according to data collated from the BSE disclosures.

The order inflows were largely from defence, international businesses, and the private and public power sectors. 

In the first half of the last financial year, L&T, KEC International, BHEL, and KPIL reported an order intake of Rs 2.09 trillion. The figures are not comparable as companies do not disclose all order wins to the exchanges. The H1FY24 data for HAL was not available.

For the September-2024 ended quarter (Q2), L&T disclosed to the BSE order wins worth up to Rs 47,500 crore. L&T does not share the exact value of each order win but a range. The Rs 47,500 crore is the combined upper range. For H1FY25, L&T's order wins stand at Rs 1.18 trillion.

Others such as BHEL and HAL reported order wins of Rs 27,000 crore and Rs 26,000 crore, respectively in Q2. For the entire H1FY25 period, BHEL new orders were at Rs 36,480 crore, higher by 9 per cent from a year ago period. HAL’s management at the start of FY25 said they expect new orders worth Rs 47,000 crore to materialise in a one-year timeframe.

In a report released on Tuesday, rating agency Crisil said H1FY25 upgrades were led by the construction EPC, renewable energy, capital goods and pharmaceutical sectors.

“Capital goods upgrades were mainly because of improved revenue visibility from the strong order book, with an uptick in private capex and infra build-out,” the report added.

The capital goods sector buoyancy is yet to show for the roads and allied sectors such as cement.

“The National Highways Authority of India (NHAI) road awards remained muted in September 2024 with project awards of just 10km. Year to date, awards by the NHAI at Rs 159km are down one per cent from a year ago,” Brokerage firm Nuvama noted in a report.

Executives from the cement sector also confirmed that increased activity was yet to be seen. “Cement is one step behind in the timelines of contract awarding. Once the construction contractors receive orders, only after the cement sector comes into play. So, activity in the cement industry is not yet visible,” said Deepak Khetrapal, managing director of Orient Cement.