The Hindu Business Line : Gathering pace

Order flows to continue
Infrastructure spending to increase order flows for capital goods
BHEL to benefit from ultra mega power projects
Reduction in Customs duty could reduce input costs

The 54 per cent increase in Budget allocation towards creation of rural infrastructure will ensure constant flow of orders to companies in the construction materials and electric equipment sector such as Eimco Elecon, International Combustion, Sanghvi Movers and TIL.

Increased allocation to rural water supply, micro irrigation programmes and water management programmes will continue to fill the order books of Kirloskar Brothers, which caters to this segment.

Greaves Cotton, Kirlosakar Oil Engines and Escorts also cater to the rural segment and will benefit from the pro-agri stance of the Budget.

Power equipment

Power equipment manufacturers are in for a substantial increase in demand over the next few years. Four ultra mega power projects are going to be awarded within a year.

BHEL can look forward to some big-ticket orders. Extension of Section 80(IA) benefit will enhance investment across the power sector and also in repairs and maintenance.

BHEL services close to 70 per cent of the existing sets and this measure could provide a fillip to its services business and also improve margins.

It could also maintain the order momentum for makers of transmission and distribution products such as Bharat Bijlee, Emco, ABB, Crompton Greaves, Easun Reyolle and Areva T&D. Reduction in Customs duty on copper and zinc will reduce input costs for these companies.

Textile machinery

Higher allocation to Technology Upgradation Fund (TUFS) for the textile machinery sector may further pep up demand for companies such as LMW, Veejay Lakshmi and Batliboi.

Issues such as capacity crunch and long delivery schedules could, however, redirect such funds towards imported machinery.

Reduction in Customs duty could accelerate this process. The demand of the industry to extend the TUFS scheme to machinery manufacturers has not been met hampering capital investments in the sector.

Railways

The Railways would be sourcing more wagons, coaches and diesel locomotives and investing more in new rail lines and renewal of old ones. This could generate more business for BEML and Texmaco.