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Siemens, ABB India in Focus as Capital Goods Sector Rides Capex Wave

Siemens, ABB India in Focus as Capital Goods Sector Rides Capex Wave

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Highlights

  • Siemens (NSE:SIEMENS) reported order intake growth of about 32.6 percent, while ABB India (NSE:ABB) posted around 25 percent growth, reflecting a pickup in private capital expenditure.
  • The capital goods sector is trading at roughly 35 times one-year forward earnings, above its 10-year average of about 28.1 times.
  • The government met close to 98 percent of its revised FY26 capex target of Rs 11 lakh crore and has set a Rs 12.3 lakh crore target for FY27.
  • Data-centre-related capital expenditure is emerging as an additional growth avenue for electrical equipment and automation companies.

Siemens (NSE:SIEMENS) and ABB India (NSE:ABB) continue to draw investor attention as a broader re-rating of India's capital goods sector plays out, underpinned by a pickup in private capital expenditure and emerging demand from data-centre infrastructure.

Why Investors Are Watching

Recent order intake data has shown Siemens posting growth of about 32.6 percent and ABB India around 25 percent, evidence that private sector capital expenditure has been gathering pace after a prolonged period of muted investment. Both companies, along with peers such as Schneider Electric, are seen as beneficiaries of a shift in enterprise spending toward automation, electrification and power infrastructure, with data-centre-related capital expenditure flagged as a potential new demand pool for electrical equipment makers.

Market Context

The capital goods sector as a whole is currently trading at close to 35 times one-year forward earnings, well above its ten-year average of roughly 28.1 times, reflecting the market's willingness to pay a premium for companies seen as direct beneficiaries of the capex cycle. This valuation backdrop comes as the government spent close to 98 percent of its revised FY26 capital expenditure target of Rs 11 lakh crore and has set a higher Rs 12.3 lakh crore target for FY27, reinforcing expectations of sustained public infrastructure spending alongside private investment.

What Market Participants Will Monitor

Analysts and investors are likely to track quarterly order inflow disclosures from Siemens and ABB India, along with commentary on data-centre-linked capital expenditure opportunities and margin trends amid rising input and competitive pressures. The pace of private sector capex announcements across manufacturing, power and infrastructure will also be watched, as will government capex disbursement data through FY27.

Industry or Peer Perspective

Siemens and ABB India operate within a competitive landscape that includes Larsen & Toubro (NSE:LT), BHEL (NSE:BHEL), Cummins India (NSE:CUMMINSIND) and Thermax, each exposed to different segments of the capital goods and industrial automation value chain. While Cummins remains a dominant player in backup power equipment, Siemens and ABB are viewed as better positioned to capture a share of data-centre-linked electrical infrastructure spending.

Conclusion

The capital goods sector's premium valuations reflect optimism around a sustained capex cycle, but they also raise the bar for earnings delivery in the quarters ahead. Siemens and ABB India's order books, along with broader private investment trends, will remain key reference points for market participants tracking the sector's trajectory. This article does not constitute investment advice.

FAQs

Q: Why is the company in focus today?

A: Siemens and ABB India are being tracked for strong order intake growth, about 32.6 percent for Siemens and 25 percent for ABB India, which reflects a broader pickup in private capital expenditure and emerging data-centre-linked demand for electrical equipment.

Q: What factors are investors monitoring?

A: Investors are watching quarterly order inflow disclosures, margin trends, and government capital expenditure data, given the capital goods sector's current valuation of about 35 times forward earnings against a 10-year average of 28.1 times.

Q: Which peer companies are relevant?

A: Peers include Larsen & Toubro, BHEL, Cummins India and Thermax, each exposed to different parts of the capital goods and industrial automation value chain.

Q: Is this article investment advice?

A: No. This article is intended solely for informational purposes and should not be considered investment, financial or trading advice.

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