BSE Capital Goods index hits new high; BHEL, Polycab, Thermax soar up to 7%

BSE Capital Goods index hit a new high of 79,887.59, up nearly 2% in Thursday's intra-day deal. The index has surged 17% in the past two months.

The BSE Capital Goods index today hit a new high of 79,887.59, surging nearly 2 per cent in Thursday’s intra-day deal after a strong buying in power, cables, and related companies. In the past two months, the capital goods index has soared 17 per cent on a healthy business outlook.

 

At 12:28 PM, the BSE Capital Goods index was up 1.5 per cent, as compared to a 0.03 per cent decline in the BSE Sensex.

 

Among the constituents, Bharat Heavy Electricals Limited (BHEL), Cummins India, GE Vernova T&D, Hitachi Energy, Kirloskar Oil Engines, and Polycab India hit their respective all-time highs.

 

 

Meanwhile, Polycab India, BHEL, Thermax, CG Power, Hitach Energy, GE Vernova T&D and Kirloskar Oil Engines rallied between 3 per cent and 7 per cent on the BSE.

 

Why did BHEL, Polycab India and others outperform the market?

 

A BJP win in the 2026 West Bengal Assembly elections marks a historic political shift, ending over 15 years of Trinamool Congress (TMC) rule under Mamata Banerjee and bringing the state under "double engine" governance (BJP at the Centre and the State). With a focus on industrialisation, capex rejuvenation, inflation management, and focus on reforms, the BJP’s win in West Bengal (WB) could mark the beginning of a capex spending cycle in the state - a template it followed in other states where it came to power in recent years, according to analysts at Elara Capital.

 

With the BJP firmly in the driver’s seat in most of East and Northeast States - Odisha, West Bengal, Assam, Bihar, Chhattisgarh, Tripura, Manipur, and Arunachal Pradesh – the brokerage firm sees greater capex focus in East India.

 

Among the individual stocks, BHEL hit a new high of ₹405.50, soaring 5 per cent in an intra-day deal. Since April, the market price of PSU has zoomed 65 per cent.

 

Analysts at JM Financial Institutional Equities reiterate ‘Buy’ rating on BHEL with a revised target price of ₹435 (₹393 earlier). The brokerage firm expects BHEL to maintain order inflows of ₹60,000 crore–70,000 crore each in FY27 and FY28. 

 

“We revise our FY28E EPS from ₹12.3 to ₹13.6, considering 100bps improvement in gross margin (has further upside potential; was 38– 40 per cent in 2008–12 cycle) and increase in interest income due to better operating cash flow (OCF),” analysts said.

 

Meanwhile, good accretion of orders and a strong ordering pipeline will keep order inflows strong, coupled with a strong pick in execution from FY27E onwards. This will also help margins and return ratios to improve meaningfully over the next 2-3 years. Hence, analysts at ICICI Securities rate the BHEL 'Buy' with a fair value of ₹460 (30x FY28E EPS).

 

On the other hand, Polycab said the Indian wires & cables industry is projected to grow 1.5-2x Real GDP (vs 1.5x Real GDP historically). The key growth drivers are robust domestic demand due to the government’s thrust on infrastructure, increasing energy consumption, boosting demand for power generation, transmission & distribution (T&D) infrastructure, real estate upcycle, and high demand from sunrise industries (Data Centers, EV, Electronics, Defence etc.). 

Power T&D is expected to attract investments of ₹9 trillion plus over the next 7 years, on account of rising power consumption, aggressive renewable energy additions, and inter-regional grid connectivity projects.

 

Further, the government plans to increase manufacturing contribution to GDP to 25 per cent.

  The new industries and their ecosystem are being set up, supported by the PLI scheme in electronics, automobiles & auto-components, medical devices, white goods, solar PV modules, ACC Battery, green hydrogen, semiconductors, drones, etc. India’s refining capacity is expected to increase from 258.1 million metric tonnes per annum in April 2025 to 450 million metric tonnes per annum by the end of 2030, and is projected to account for about 30–33 per cent of global energy demand growth, Polycab said in an investor presentation. 

============================================

 

Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.