Cummins Inc.

(New York Stock Exchange)
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Somewhat Bullish +45

Stocks to buy: BHEL, L&T, Siemens, RITES, Cummins, Titagarh among top capital goods picks

AI-generated analysis

πŸ“ˆ B&K Securities identifies the Indian capital goods segment as seeing continued demand despite West Asia war overhangs.

πŸ’‘ Data centers are emerging as a key growth avenue, with Siemens, ABB, and Schneider expected to capture 10-20% of capex.

πŸ”‹ Cummins remains dominant in the backup power sector for data centers and industrial applications.

πŸ“‰ New investments announced in 4QFY26 fell 37.5% YoY to Rs 13.8 lakh crore due to deferred customer decisions.

⚑ Siemens reported 32.6% order intake growth while ABB India saw 25% growth in the quarter.

πŸ—οΈ EPC players faced estimated revenue losses of roughly Rs 5,000 crore due to execution disruptions linked to the conflict.

πŸ”Œ Medium- and high-voltage transformer makers remained insulated by a persistent supply-demand gap supporting pricing power.

πŸ›οΈ The government achieved 98% of its revised FY26 capex target of Rs 11 lakh crore, strengthening public spending confidence.

πŸ“Š Sector valuation stands at 35x one-year forward earnings against a 10-year average of 28.1x.

βœ… B&K Securities gives 'Buy' ratings to Siemens Energy India, APAR Industries, Engineers India, L&T, RITES, Titagarh, and Triveni Turbine.

⚠️ B&K Securities assigns 'Hold' ratings to ABB India, BHEL, Cummins India, Praj Industries, Thermax, and Voltamp Transformers.

🌍 Prolonged disruption in the Middle East poses a near-term risk to capex deployment and project execution timelines.

Bullish Signals
  • Sustained demand in the Indian capital goods segment despite geopolitical tensions in West Asia.
  • Data centers opening new growth avenues with Siemens, ABB, and Schneider capturing significant market share.
  • Cummins maintaining dominance in the backup power sector for data centers and industrial needs.
  • Siemens reporting strong 32.6% order intake growth and ABB India seeing 25% growth.
  • Medium- and high-voltage transformer makers insulated by supply-demand gaps allowing pricing power.
  • Government achieving 98% of revised FY26 capex target, signaling continued public investment momentum.
  • Transmission and distribution sector showing strong momentum with a Rs 1 lakh crore annual bidding pipeline.
  • Robust growth in grid infrastructure, electrification, and backup power sectors for specific players.
Risk Factors
  • West Asia war remains an overhang that has deferred customer decisions and stretched award timelines.
  • Fuel shortages, commodity inflation, supply-chain disruptions, and a weaker currency could pressure margins in the near term.
  • Order inflow growth in the Indian capital goods segment remained muted at 3% YoY during the quarter.
  • EPC players hit hardest with estimated revenue loss of about Rs 5,000 crore for Larsen & Toubro alone.
  • EBITDA margins contracted by 77 basis points as most companies could not fully pass through commodity inflation and currency-related costs.
  • Lower-voltage transformers saw capacity catch-up limiting the ability to pass on cost increases.
  • Prolonged disruption in the Middle East could still pose a near-term risk to capex deployment and project execution.
  • Sector trading at 35 times one-year forward earnings, which is significantly above the 10-year average of 28.1 times.
Full Analysis
B&K Securities maintains a positive outlook on the Indian capital goods sector, citing sustained demand despite geopolitical overhangs from the West Asia conflict. The brokerage highlights specific growth avenues in data centers and grid infrastructure, noting that while fuel shortages and supply-chain disruptions may pressure margins, ordering is expected to resume once conditions stabilize. Siemens, ABB, and Schneider are identified as key players poised to capture 10-20% of data-center capex, with Cummins retaining dominance in backup power solutions. Financial performance for the sector remains mixed in the fourth quarter of FY26. While the broader '360 ONE Capital Goods' universe saw revenue rise by 10.7% year-on-year to Rs 13.8 lakh crore, EPC players faced significant headwinds with estimated revenue losses totaling over Rs 5,000 crore due to project execution disruptions. Conversely, companies focused on grid infrastructure and electrification like Siemens Energy India, Cummins India, and APAR Industries posted robust growth driven by demand for transformers, turbines, and backup power systems. The report identifies medium- and high-voltage transformer makers as better insulated from inflationary pressures due to persistent supply-demand gaps that support pricing power. Government spending remains a stabilizing factor, with the government achieving 98% of its revised FY26 capex target, reinforcing confidence in continued public investment momentum heading into FY27. The sector currently trades at a premium valuation of 35 times forward earnings compared to a 10-year average of 28.1 times. B&K Securities has issued specific buy and hold ratings for various companies within the capital goods space. Buy ratings include Siemens Energy India, APAR Industries, Engineers India, Larsen & Toubro, RITES, Titagarh Rail Systems, and Triveni Turbine. Hold ratings were assigned to ABB India, BHEL, Cummins India, Praj Industries, Thermax, and Voltamp Transformers, reflecting a nuanced view on individual company prospects amidst sector-wide challenges.