Capital goods sector buoyant on rising govt capex

Mumbai: Led by continued significant government outlays towards railways (including metros), defence and renewable sectors, capital goods makers are likely to see revenue rise 9-11 per cent in fiscal 2025, a report showed on Monday.

Operating margin could moderate 80-100 basis points to 12-13 per cent in FY25 as the market scenario continues to be highly competitive and exports, which offer higher margins, remain sluggish, even as prices of raw material (mainly steel, copper, and aluminium) are stable, according to report by CRISIL Ratings.

That said, modest capital expenditure (capex) and continuing lower reliance on debt will support credit profiles, it added. “Private sectors’ continued capital outlays in conventional sectors (6-8 per cent, year-on-year rise) supported by a ramp-up in commissioning of renewable capacities (25-30 per cent YoY rise) augur well for prospects of capital goods companies,” said Aditya Jhaver, Director, Crisi1 Ratings.