Notes on Indian equities, sectors and economy

Archive for the ‘Capital Goods’ Category

India’s plummeting capex: now at 7 year lows

Posted by fairval on April 2, 2013

Couple of good charts from a Goldman doc, showing how bad India’s capex cycle as got. The first one here is on new projects being awarded. We are now at 2005 levels.

New project orders now at 2005 levelsWhat is important to note is, capex levels were badly subdued for almost 7 years between 1997-2005. There was a capex boom in the 1992-96 period, which cant be seen in the above graph. So capex can stay depressed for several years. Because companies which can fund capex get into trouble in a down cycle, and it takes them a while to get out of it. Currently for ex, most infra cos are in deep trouble, so are steel, power cos.

While in manufacturing things arent as bad as in the previous downturn, still, an quick recovery in capex may not happen. The next chart also supports this point. Stalled projects have hit a high, this will either need to be cleared, or will end up as NPA in the banking system.

Stalled capex at all time high!






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Slowdown in Investments

Posted by fairval on June 14, 2011

An article titled Where have all the Investments Gone by Mahesh Vyas in FE has some very interesting and worrying data. Some excerpts:

CMIE’s CapEx database has thrown up three disturbing signals. The first is that the pace of announcement of new investments has fallen substantially. New investment announcements amounted to R2.63 trillion in the quarter ended March, 2011. This was lower than the R2.92 trillion in the preceding quarter, which, in turn, was lower than the R3.57 trillion worth of new announcements made in the earlier quarter. The average value of new investment announcements in the past three quarters, at about R3 trillion per quarter is nearly half the R5.8 trillion per quarter average in the preceding three quarters.

The total new investments announced in 2010-11 were lower than in 2009-10. This, and the persistence in the fall in quarterly new investment announcements, indicates a possible slowing down….









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Sharply polarised FY11, Investment theme gets dumped

Posted by fairval on March 31, 2011

Index return in FY11

The table shows the returns various indices made in FY11 (1 Apr 2010 to 31 March 2011). Note the humongous difference between Nifty and NSE Midcap – a mind boggling 16%.

In sectors, clearly sectors related to investments got dumped, while consumption and export themes did well. The UPA government is hellbent on driving consumption thru large fiscal deficits, while capex goes nowhere. This isnt good. No wonder we have no control on inflation.

Realty is one amazing sector – real estate companies raised equity early in FY11, promptly rigged product prices, saw demand plunge, and underperformed.

Posted in Capital Goods, Data, Markets, Metals, Pharma and Lifesciences, Real Estate / Construction | Leave a Comment »

Power sector JVs

Posted by fairval on July 20, 2010


JVs in the BTG space

 The emerging battle lines in the power sector. Some of these will try to compete with BHEL and L&T. 

The BGR Hitachi JV status remains unclear to us. Some media reports in May said the deal was signed. Some other reports say the two companies are still in discussion and the deal will be signed by July. Even in Oct09, a series of stories appeared saying a deal with Hitachi was being signed ‘soon’.

While the stock market is going ga-ga over BGR’s prospects in the power BTG space, some industry sources we have been checking with are not so enamoured by the company.

Posted in Capital Goods, Infrastructure | Leave a Comment »

Construction equipment market

Posted by fairval on July 18, 2010

Construction Equipment Market

Data from a corporate PPT, tho the source is what looks like some research outfit.

Lot of action in backhoe loader market. Volvo, Escorts and BEML have entered the market this year. Mahindra will enter the market in 2011. JCB dominates the market with something like 75% market share. And it is a big market, around Rs 3000 crore, as per this table. JCB in India has annual revenues around Rs 3000 crore, could be more now.

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Stock Idea: Saraswati Ind Syndicate

Posted by fairval on July 6, 2010

The latest stock idea on www.wisdomsmith.com

Saraswati Industrial Syndicate (SISL) is a well run company, remarkably low profile for its size. For the year ended FY09 (year ends in Sep 09), it registered a consolidated turnover of over Rs 2100 crore, and a net profit of Rs 101 crore.

For the detailed note, try …




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