New order inflows in Q4 tepid so far for engineering, capital goods

The trend for new orders won or awarded in the first two months of the current quarter appear tepid compared to a year ago, shows brokerage estimates and company disclosures.

 

According to Antique Stock Broking, for February, projects awarded remained flat year-on-year (Y-o-Y) at Rs 56,000 crore. Those at ICICI Securities noted a similar trend for the defence segment, stating orders have started to flow but the pace remains muted.

 

Data compiled for the country’s largest engineering firm Larsen & Toubro (L&T) confirms sluggishness, when compared to a year ago.

 

So far in Q4, up to March 19, L&T reported new order wins of at least Rs 18,000 crore to the stock exchanges. This compares to at least Rs 45,500 crore worth of orders reported for the same period a year back. L&T does not disclose the exact order value, but gives a range. The value considered was that of the lower band. The lower number is despite L&T noting Q4FY24 was a weak quarter for new orders owing to the general elections underway in the country at that point.

 

However, analysts expect new order wins to pick momentum. Those at Antique noted, “The pace of awarding is lagging behind announcements and tenders. An increase in awarding is anticipated to enhance the order book, improve the current weak sentiment, and neutralise the cyclical slowdown. Overall, the strong activity in new project announcements and tendering suggest that awarding could increase in the future.”

 

KEC International, for instance, last week reported a Rs 1,267 crore order win for its transmission & distribution (T&D) and cables business. Vimal Kejriwal, managing director (MD) & chief executive officer (CEO) KEC International, in the press note, said, “With these new orders, our YTD order intake stands at over Rs 23,300 crore, a growth of 35 per cent vis-à-vis last year.” Kejriwal remains positive on the strong growth outlook for India’s T&D market.

 

Earlier this month, Kalpataru Projects International (KPIL) also reported a Rs 2,306 crore order win, taking its fiscal year to date (FYTD) order intake to  Rs 22,500 crore.  This is, however, lower than the order intake of Rs 30,000 crore, the company had stated by the end of March 2024.

 

Companies, however, see increased awarding activity towards the end of March, as the financial year closes.

 

For instance, for companies such as Bharat Electronics, analysts expect more order wins to flow in this month from the defence segment. Analysts at ICICI Securities noted “The order inflow for BEL remains strong as it has received orders worth Rs 17000 crore for FY25. We expect another Rs 7,000-8,000 crore orders to flow in March.”