Capital Goods: Execution is Key to Q3FY26 Earnings Surge

Capital goods companies are poised for stronger sequential earnings in the October-December quarter (Q3FY26). This growth is attributed to a post-monsoon recovery, robust order inflows, and enhanced execution, particularly in high-voltage power and OEM segments. The sector anticipates mid-teens revenue growth, driven by strong order books and healthy industrial demand.

Within the transmission and distribution (T&D) sector, product companies are expected to lead with around 18% growth. GE Vernova T&D India is projected for strong performance, while Siemens Energy and Hitachi Energy anticipate approximately 17% growth, fueled by domestic momentum and execution strength. Project companies are also set for robust 17% average revenue growth.

EBITDA margins are generally expected to improve year-on-year, with GE Vernova projected at 22% due to healthier gross margins and operating leverage. However, ABB India might face a margin decline due to weaker pricing power and currency impacts. The sector's future re-rating hinges on sustained execution and private capital expenditure.