Capital goods firms to see double-digit revenue growth: Report

NEW DELHI: Capital goods companies are poised to see revenue growth at a healthy 16-18 per cent during current financial year ending March 2023 on account of improved order flows, said Crisil Ratings. Revenue growth in the next financial year starting April 2023 too is expected to be in double digits.

Capital goods companies here include procurement, and construction (EPC) service providers (excluding road and civil construction) and manufacturers of equipment. "Revenue growth is expected to remain healthy, in double digits, at 10-12 per cent next fiscal as well, supported by a strong order backlog and steady inflow of fresh orders.

This takes forward two consecutive strong years for a sector that saw sluggish growth1 in the decade through fiscal 2021," the ratings agency said.

Elevated commodity prices, rising government and private sector spending on infrastructure, as well as investments under production-linked incentive (PLI) schemes, have resulted in strong growth.

As part of its Atmanirbhar plan, the Government launched Production Linked Incentive (PLI) schemes in varied sectors to make Indian manufacturers globally competitive, attract investments, enhance exports, integrate India into the global supply chain and reduce dependency on imports.

"Supportive public expenditure stemming from sustained government thrust on infrastructure and focused execution augur well for capital goods companies supplying to cement, energy, and steel product manufacturers," said Anuj Sethi, Senior Director, CRISIL Ratings. "Further, capacity is being built for PLI-driven schemes in automobiles, pharmaceuticals, energy, electronics and textile segments, which is opening up opportunities for equipment sales this fiscal and the next," Sethi added.

CRISIL Ratings analyzed 74 companies having aggregate revenue of Rs 2.17 lakh crore, comprising 46 per cent of the revenue of the capital goods sector.