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Q3 inflows at INR 286bn, down 33% YoY on strong base

Major capital goods (CG) companies, excluding L&T, have announced orders with cumulative worth of INR 286bn in Q3FY24, down 33% YoY. Excluding a large order worth INR 260bn for 1,200 nos. 9,000 HP locomotive order in the base quarter, inflows in Q3FY24 rose 73% YoY. Order inflows from Defence PSUs rose 13.7x YoY to INR 177bn in Q3, driven by uptick in awarding by the government. Bharat Electronics (BHE IN) saw a whopping INR 122bn inflow in Q3. Ex-Defence, inflows were led by Power – Thermal power and transmission & distribution (domestic & overseas), and water projects. Rail & metro rolling stock and civil inflows witnessed a slowdown amid delayed awarding in domestic and international orders.

Elara CG universe – Q3FY24E sales may rise 18% YoY

Expect Elara CG universe’s Q3FY24E revenue to grow 18% YoY, on healthy industrial demand, robust order book and better execution amidst improved supply chain. Siemens’ Q1FY24E and ABB India’s Q4CY24E revenue may surge 21%/16%, on higher order book and ease of supply chain. Thermax’ Q3FY24E revenues may rise 16% on better execution across segments. KEI Industries’ Q3E revenues may surge 17% YoY on robust infra demand in wires & cables. KECI’s revenues may grow 16%, led by T&D and civil. Voltas’ revenue may rise 21% YoY due to pick-up in room air conditioner (RAC) space ahead of the summer season. Cummins’ Q3E revenue could drop 1% YoY as demand is yet to stabilize for the new energy norm (CPCB IV) power gensets.

Garden Reach Shipbuilders & Engineers’ Q3E revenues may rise 60% YoY as it yields higher realization in the bell-curve phase. Bharat Dynamics’ revenue may rise 60% on execution pick-up from Q3FY24. Bharat Electronics’ revenue may rise 29% due to spill-over of LRSAM order from Q2. Hindustan Aeronautics’ revenue could jump 7% and BEML’s revenues may rise just 3% YoY amid delay in Mumbai metro order. RITES’s Q3E revenues could fall 1% YoY amid drop in export realization and higher competition in quality assurance.

Consumer Electricals/Electronics – EMS, cables and RAC, key wins Consumer Electricals/Electronics plays may see a 30% revenue growth YoY in Q3E, likely in anticipation of good summers for RAC, decent festive season demand, and execution of rising order book of electronics manufacturing service (EMS) companies. Dixon’s Q3E revenue may grow 86% YoY on higher mobile phone volumes. Kaynes’ Q3E revenue may spike 60% on robust order book. Amber Enterprises’ Q3E revenue may rise 19%, led by uptick in RAC segment and non-RAC components. V-Guard’s revenue may grow 15%, led by healthy cables demand and Sunflame’s portfolio addition. Havells’ Q3E revenue could rise 13% YoY on strong growth in Lloyd (RAC) and wires & cables. Eureka Forbes’/Crompton’s Q3E revenue may grow 9%/8%. We prefer Bharat Dynamics, Eureka Forbes, Hindustan Aeronautics, Amber Enterprises, Bharat Electronics, Crompton Greaves Consumer, Cummins India, Havells India, KEC International, KEI Industries, Siemens, V-Guard Industries, and Voltas.

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