Many investors use Diwali as an opportunity for portfolio reviews and look for opportunities to invest for the new Samvat. During Muhurat trading, you may see some stocks related to India’s infrastructure growth, factory investment, and industrial upgradation. Capital goods businesses may be worth looking into as they provide machinery for businesses to increase capacity, upgrade facilities, and improve efficiency.

However, there are many factors to consider when looking into capital goods stocks for Diwali. Businesses that are winning new orders, delivering on time, and turning profits into cash will be of interest if you are looking to invest in capital goods stocks for Diwali. India’s capital goods sector has performed well due to government investment in various sectors of the industry. However, increased costs of inputs and delays in delivery are a key risk.

Why Capital Goods Stocks are Worth Considering

Capital goods stocks provide machinery, electrical equipment, industrial equipment, and engineering solutions to other businesses. Customers include manufacturers, infrastructure providers, and commercial facilities.

There is increased demand from businesses looking to increase factory capacity and automate their processes. They may also want to upgrade their machinery while also investing in new facilities. Orders can be generated from government infrastructure spending.

This sector looks promising for FY2026-27, as there is continued investment in capital expenditure. CRISIL Ratings predicted a 12%-14% growth in revenue for the capital goods industry during the fiscal year.

Look for businesses that can capitalise on this demand. While having a large order book can help boost revenue, it is also important to look at the quality of the orders, how quickly they are being delivered, and whether cash is being received from customers.

Capital Goods Stocks to Watch for Samvat 2083

The following stocks provide a good look into the civil, industrial, and electrical equipment industry in India.

1. Larsen & Toubro

It is a diversified engineering and construction business with exposure to industrial and infrastructure projects. This makes it a good stock to look into to understand the overall capital expenditure trend.

For Samvat 2083, look at how many orders are coming in, revenue growth, and how quickly existing contracts are being delivered. A large order book can help boost revenue over several quarters. But look at the quality of the new orders and how profitable the engineering side of the business is.

As Larsen & Toubro has exposure to international projects, there are more factors to consider. This includes currency fluctuations and geopolitical issues. Look at the performance of each segment to see where the growth is coming from in the civil, industrial, and engineering sector.

What to look out for:

Orders, Order Book Growth, Delivery Speed, Operating Margins, and Working Capital Requirements.

2. ABB India

ABB India is a business providing electrification, motion, and industrial automation. Their equipment and technology help industrial customers increase energy efficiency and automate processes.

Their growth depends on whether industrial customers will continue to spend on automation and electrification. Factory expansion, upgrading machinery, and the need to increase efficiency can help drive demand. However, new orders need to be turned into revenue and profit at a sustainable margin.

Look at the orders coming in, revenue growth, and profitability of the business as inputs change. This can affect margins if the customers are not happy with the price increases.

What to look out for:

Order Growth, Segment Margins, Revenue Growth, Industrial Demand, and Valuation vs Expected Profit Growth.

3. Siemens Limited

Siemens Limited provides industrial automation, digitisation, and electrical equipment. This connects with manufacturers trying to increase productivity and industrial customers investing in new machinery.

Look at whether the orders are coming in across the board or if there are a few large projects. Orders can be affected by how much the customers are willing to invest in industrial automation. Large engineering projects can take time to turn into revenue.

A good place to start would be to look at new orders compared to sales over several quarters. If there are more orders but revenue is low, look at the project timelines and what the customers need to be happy with.

What to look out for:

Industrial Orders, Revenue Growth, Segment Profitability, Customer Capex Growth, and Earnings Growth.

4. CG Power and Industrial Solutions

CG Power and Industrial Solutions is an electrical equipment manufacturer providing solutions to industrial sectors. This provides exposure to demand for motors, transformers, switchgear, and more.

Investors looking into engineering stocks for Samvat 2083 should look at whether there are enough new orders to provide sustainable growth without putting pressure on manufacturing and margins. High demand is only useful if the company can deliver on time and ensure the quality of its products.

Look at the new orders, the product mix, and manufacturing utilisation. High utilisation can help with absorbing fixed costs, but running at full capacity could require extra investment or increase delivery times.

What to look out for:

Order Growth, Factory Utilisation, Product Margins, Capacity Growth, and Cash flow from Operations.

5. Thermax

Thermax provides heating, cooling, energy management, and environmental solutions to industrial customers. These can include industrial businesses that need to increase efficiency, manage emissions, and expand their production facilities.

This will depend on industrial investment and demand for energy-efficient and environmentally friendly equipment. There can be opportunities from boiler, cooling, and industrial utility projects, but this can be affected by changes in customer spending.

Look at the profitability of the new orders and whether the company can pass on increased material costs. The capacity utilisation and planned investment should also be looked at. Expanding can help with future sales but can increase costs in the short term.

What to look out for:

Orders, Segment Margins, Capacity Utilisation, Project Delivery, and Working Capital.

Risks to Consider for Samvat 2083

Capital goods stocks can benefit from long-term investment cycles but can be sensitive to business conditions. Here are a few risks worth considering.

• Delays in Projects: Delays in approvals, land purchases, or customer decisions.
• Increased Input Costs: Increased costs of metals, components, and logistics can impact operating margins.
• Low Private Capex: If businesses are delaying expanding their factories, new orders for new equipment may be slow.
• Working Capital Pressure: If customers are taking longer to pay, this can increase borrowing requirements.
• High Valuations: If there are high expectations for growth, this may be reflected in the stock price.

Bottom Line

Investing in capital goods stocks can provide you with an opportunity to look into India’s industrial growth, demand for equipment, and investment in manufacturing. Stocks such as Larsen & Toubro, ABB India, Siemens, CG Power, and Thermax provide exposure to different areas of the civil engineering and electrical equipment industry.

Look at the orders coming in, delivery capabilities, capacity utilisation, margins, and working capital. This will help identify businesses that have sustainable growth and those that may have a large order book but will need time to turn into cash.

Researching capital goods stocks this Diwali? Visit HDFC SKY MoneyFest for expert stock recommendations, then assess company fundamentals, valuations and risks before investing.