Limited visibility may hurt ABB, Siemens more than Thermax or Cummins

An analyst at a domestic brokerage said that Siemens is a highly cyclical stock, due to the high correlation between the company's revenue growth and India's gross fixed capital formation

Stocks of private sector capital goods majors such as Siemens and ABB, which were investors’ favourites not long ago, have seen significant correction after the Covid-19 outbreak.

Shares of ABB and Siemens are down 37-44 per cent from their January highs. Thermax and Cummins, too, have lost 35-41 per cent during this period. 

However, the relatively lower order book/revenue ratio means that ABB and Siemens could face more heat, if the economic slowdown prolongs.

The lockdown has impacted most companies at a crucial time in March, when typically new orders and execution gain momentum. 

ABB and Siemens, which are close peers, saw revenues fall