Rise in profits may not signal revival of capital goods sector: Analysts

Order inflow numbers need to show a healthier trend, which will be difficult under these conditions

Capital goods companies, including Larsen & Toubro (L&T), Bharat Heavy Electricals and KEC International, have reported healthy profit growth in the October-December quarter, but analysts do not want to take it as a sign of revival for the sector.

“There are signs of capital goods recovery, but it should be viewed with qualification. GST has led to substantial disruption in terms of de-stocking and restocking, resulting in volatility. Therefore, what we are seeing today is higher production in certain quarters of the capital goods segment — non-electrical machinery and transport (buses, tractors and trucks). It is not yet generalised,” said Madan