Stocks of most capital goods and engineering companies are seen moving in a narrow range with a negative bias in the coming week amid lack of triggers. Lack of any positive cues in terms of order inflows, policy reforms and investment sentiment has been weighing on the sector for a while now. The impact of a sharp slowdown in the pace of investments is reflected in the ordering activity in the capital goods sector.
In a recent report, weak industrial demand and regulatory hurdles are impacting the capital goods sector's overall profitability. Sharp jump in working capital levels and interest costs are hurting the companies' margins. Ratings agency CRISIL said the working capital requirements of capital goods and engineering companies was at a five-year high due to inventory build-up and delay in payments. "We have either downgraded the ratings or revised the outlook to negative of 117 capital goods entities in 2011-12 (Apr-Mar). We believe that the revenue growth and profitability of capital goods entities will further slacken in 2012-13, resulting in sustained pressure on their credit quality," the rating agency said in a report.
(www.rupeedesk.in)
In a recent report, weak industrial demand and regulatory hurdles are impacting the capital goods sector's overall profitability. Sharp jump in working capital levels and interest costs are hurting the companies' margins. Ratings agency CRISIL said the working capital requirements of capital goods and engineering companies was at a five-year high due to inventory build-up and delay in payments. "We have either downgraded the ratings or revised the outlook to negative of 117 capital goods entities in 2011-12 (Apr-Mar). We believe that the revenue growth and profitability of capital goods entities will further slacken in 2012-13, resulting in sustained pressure on their credit quality," the rating agency said in a report.
(www.rupeedesk.in)
