Brokers’ call: Q2 revenue to remain mixed for capital goods companies, says HSBC

HSBC expects revenue growth in Q2 for capital goods companies to remain mixed, as companies with a strong bias towards T&D and export orders are likely to report healthy growth while others may suffer.

As such, while Cummins, KPP & KEC may surprise positively, Siemens, Thermax and SKF India may surprise negatively.

Capital goods companies have seen significant margin erosion in the past 4-5 quarters on account of pricing pressure, lower volumes & high input costs.

However, input costs have declined lately and most companies are currently in restructuring mode. Pricing seems to be stabilising at low levels; so there will be limited margin erosion.