In line with the market, stocks of most capital goods and engineering companies are seen firm in the first few trading sessions of the coming week. Investors will eye India's Index of Industrial Production for July, data for which will be released Wednesday. The country's industrial growth had declined to (-)1.8% in June, mainly on account of 27.9% contraction in capital goods segment against a growth of 38.7% a year ago. Our analysis of BHEL's (Bharat Heavy Electricals) ordeook shows that orders totalling 4.5 GW and valued at 104 bln rupees could face delays oreven cancellation in a worst case scenario of de allocation of the coal locks. BHEL's earnings could decline by 65% in 2014-15 (Apr-Mar) from 2011-12 levels and the stock could move closer to 100 rupees if the Supreme Court de-allocates coal blocks from some of its customers. While maintaining underperforms rating on the stock, the brokerage has pegged the target price at 186 rupees.
Capital Goods Stocks Outlook: 10-14.09.2012
In line with the market, stocks of most capital goods and engineering companies are seen firm in the first few trading sessions of the coming week. Investors will eye India's Index of Industrial Production for July, data for which will be released Wednesday. The country's industrial growth had declined to (-)1.8% in June, mainly on account of 27.9% contraction in capital goods segment against a growth of 38.7% a year ago. Our analysis of BHEL's (Bharat Heavy Electricals) ordeook shows that orders totalling 4.5 GW and valued at 104 bln rupees could face delays oreven cancellation in a worst case scenario of de allocation of the coal locks. BHEL's earnings could decline by 65% in 2014-15 (Apr-Mar) from 2011-12 levels and the stock could move closer to 100 rupees if the Supreme Court de-allocates coal blocks from some of its customers. While maintaining underperforms rating on the stock, the brokerage has pegged the target price at 186 rupees.
