List of the Top 10 Capital Goods Stocks in India (2024)

Picture the framework of our modern world—the towering bridges, sprawling factories, and high-tech machinery that keep everything running smoothly. Behind this environment lies the capital goods sector. From the machinery that builds our infrastructure to the technology that drives progress, capital goods are the backbone of economic growth. The capital goods industry in India is set for impressive growth. In this blog, we’ll explore the top 10 capital goods stocks in India for 2024, uncovering which capital goods companies in India are leading the charge and why these investments are worth your attention.

What are Capital Goods Stocks?

Capital goods sector stocks refer to shares of companies engaged in manufacturing, distributing, and supplying machinery, equipment, and tools essential for business operations across capital goods industries. Additionally, these stocks are linked to sectors like construction, manufacturing, technology, and infrastructure.

Top 10 Capital Goods Stocks List

Here is a list of top 10 capital goods companies in India that you might be interested to invest in.

Stock Name	Sub-Sector	Market Cap (Rs. in cr.)	Close Price (Rs.)	PE Ratio (%)	Return on Equity (%)	1Y Historical Revenue Growth (%)	5Y Historical EPS Growth (%)
Larsen & Toubro Ltd	Construction & Engineering	5,12,934.97	3,730.45	39.28	12.67	20.56	8.14
Adani Ports and Special Economic Zone Ltd	Ports	3,08,640.65	1,428.80	38.05	15.95	25.64	14.27
Hindustan Aeronautics Ltd	Aerospace & Defense Equipments	2,96,778.94	4,437.65	38.94	28.91	12.95	26.76
Siemens Ltd	Conglomerates	2,40,035.74	6,740.30	122.41	15.87	20.78	16.82
ABB India Ltd	Heavy Electrical Equipments	1,64,975.97	7,785.25	132.83	22.82	18.29	22.07
Eicher Motors Ltd	Trucks & Buses	1,32,929.04	4,850.35	33.22	24.22	17.63	12.59
Havells India Ltd	Electrical Components & Equipments	1,24,618.97	1,987.80	98.07	18.06	9.52	9.99
Cummins India Ltd	Industrial Machinery	1,04,338.08	3,764.00	60.64	27.82	16.11	18.30
Polycab India Ltd	Electrical Components & Equipments	1,00,267.02	6,667.20	56.20	23.92	28.22	27.44
Mazagon Dock Shipbuilders Ltd	Shipbuilding	84,266.08	4,178.00	43.50	35.21	24.13	32.23

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data in the list is from 19th September 2024. However, for real-time updates on stock prices and market trends, visit the Tickertape Stock Screener today!

Filters:

• Sector: Industrials
• Market Cap: Sorted from highest to lowest
• PE Ratio
• Return on Equity: 10>
• 1Y Historical Revenue Growth: Set to Positive
• 5Y Historical EPS Growth: Set to Positive

Top Capital Goods Stocks: A Brief Overview

Here is a brief overview of the top 10 capital goods companies in India to invest in India.

Larsen and Toubro Ltd (L&T)

Larsen and Toubro Ltd is a prominent player among the Indian capital goods sector companies, known for its diverse portfolio spanning engineering, construction, manufacturing, and financial services. Over the past five years, L&T has demonstrated robust revenue growth at an annual rate of 10.32%, outperforming the industry average of 8.78%. The company is also poised for strong earnings performance with an expected growth rate of 19.65% for the next year, a significant improvement compared to the last three years’ compound annual growth rate (CAGR) of 4.43%.

Adani Ports and Special Economic Zone Ltd

Adani Ports and Special Economic Zone Ltd (APSEZ) is a leading port developer and operator in India. The company is anticipated to achieve an impressive earnings growth of 34.09% for the upcoming year. This forecast exceeds its CAGR earnings growth of 15.17% in the last three years, reflecting a robust growth trajectory and strengthening market position.

Hindustan Aeronautics Ltd (HAL)

Hindustan Aeronautics Ltd is a major aerospace and defence company in India that specialises in the design, development, and manufacturing of aircraft and related systems. Over the last five years, HAL’s revenue has expanded at a yearly rate of 9.65%, surpassing the industry average of 8.49%. The company has also seen a notable increase in net income, growing at a rate of 26.76% annually, compared to the industry average of 24.96%.

Siemens Ltd

Siemens Ltd, part of the global Siemens Group, operates in sectors such as energy, automation, and digitalisation. The company is known for its innovation and technological advancements in the capital goods space. With a return on equity of 15.87% and a net profit margin of 9.77%, Siemens Ltd demonstrates steady profitability and efficient use of shareholder funds.

ABB India Ltd

ABB India Ltd is a subsidiary of ABB Group, providing technology and engineering solutions in areas like electrification, robotics, and industrial automation. This company plays a key role in enhancing the efficiency and sustainability of industries across India. With a return on equity of 22.82% and a net profit margin of 11.56%, ABB India shows strong profitability and effective use of its resources.

Eicher Motors Ltd

Eicher Motors Ltd, known for its automotive and motorcycle manufacturing, has achieved impressive revenue growth over the past five years at an annual rate of 11.46%, significantly higher than the industry average of 7.94%. Additionally, its net income has grown at a rate of 12.68% per year, surpassing the industry average of 8.94%, reflecting strong operational performance and market presence.

Havells India Ltd

Havells India Ltd is a major player in the electrical equipment sector, known for its range of products including cables, switches, and lighting solutions. The company is projected to experience a substantial earnings growth of 29.68% for the next year, markedly higher than the last three years’ CAGR earnings growth of 6.72%.

Cummins India Ltd

Cummins India Ltd, a major player among the top 10 capital goods stocks in India, is a power generation and engine manufacturer. The company has maintained a low debt-to-equity ratio of 5.81% over the past five years, well below the industry average of 32.26%. This conservative approach to leveraging underscores the company’s strong financial health and stability.

Polycab India Ltd

Polycab India Ltd specialises in electrical wires and cables and has demonstrated impressive growth metrics. Over the last five years, the company’s revenue has grown at an annual rate of 17.8%, compared to the industry average of 9.13%. Its net income has also surged at a rate of 28.99% annually, well above the industry average of -5.51%, highlighting its strong market performance and profitability.

Mazagon Dock Shipbuilders Ltd

Mazagon Dock Shipbuilders Ltd, a key player in the shipbuilding sector, is projected to see a remarkable earnings growth of 87.22% for the upcoming year, surpassing its last three years’ CAGR earnings growth of 55.63%. Additionally, the company’s net income has grown at an annual rate of 29.47%, compared to the industry average of 25.24%, reflecting its strong operational efficiency and market success.

When comparing the top 10 capital goods stocks in India, it becomes clear that each company offers unique strengths, from advanced manufacturing capabilities to strategic market positioning.

Capital Goods Sector in India

Think of the capital goods sector as the backbone of industries. It’s not about making consumer products; it’s about creating the Indian machine tools that businesses need to function. Thus, everything from factories, construction sites, and transportation relies on the products of this sector.

These top capital goods companies in India manufacture heavy equipment, machinery, engines, and industrial goods. Their clients? Other industries, governments, and businesses need the right tools to keep things rolling.

Why Invest in Capital Goods Stocks?

Now, let’s talk about the big picture. Capital goods companies aren’t just making machinery; they’re also driving economies. When businesses and governments invest in new projects, they create jobs, boost productivity, and stimulate economic growth. 

Imagine building a new highway – you need construction equipment, vehicles, and more. Thus, the capital goods industry steps in to provide these essentials. As economies grow, so does the demand for these products, making the capital goods sector stocks a key player in a country’s development journey.

How to Invest in Capital Goods Stocks?

Here are some effective investment strategies that you can follow if you want to invest in capital goods stocks on the NSE:

Embrace Long-Term Growth Potential

When you’re considering capital goods stocks, it’s important to recognise their potential for long-term growth. These stocks often benefit from infrastructure expansion and industrial development. Focus on the top capital goods companies in India with consistent growth history and positive earnings trends. Therefore, by holding onto these stocks over time, you can tap into the sector’s growth and contribute to the nation’s economic progress.

Evaluate Risks and Diversify

Capital goods stocks come with growth opportunities but also exposure to market volatility and economic cycles. Check out the list of capital goods stocks in India and spread your investments across various capital goods stocks and other sectors to reduce the impact of a single industry downturn on your overall diversified portfolio. Take the time to assess the risks associated with individual stocks and the sector as a whole. Diversification is a key strategy here.

Stay Informed About Market Trends and Updates

Keep yourself updated on share market trends, advancements in the capital goods industry in India, and broader economic factors when investing in capital goods stocks on the NSE. Examining the capital goods share price trends can provide valuable insights into their market position and potential for growth. 

Furthermore, changes in government policies, technological innovations, and shifts in demand can greatly influence stock performance. Regularly follow financial news, earnings reports, and industry insights to make informed decisions about buying, holding, or selling capital goods stocks in your portfolio. Comparing the companies in our list of capital goods stocks in India can also reveal which ones stand out in terms of innovation, market share, and financial stability.

Features of Capital Goods Stocks

To understand the dynamics of the capital goods sector stocks, it’s essential to look at the features of the top 10 capital goods stocks in India and how they are influencing the overall market landscape. Here’s a closer look at what sets these stocks apart:

• Cyclical Nature: Capital goods stocks are often influenced by economic cycles. When the economy is booming, infrastructure projects and industrial activities typically increase, boosting demand for capital goods. Conversely, during economic slowdowns, these stocks can experience declines as spending on new projects and equipment drops. This cyclical nature means that capital goods investments can offer significant growth during upswings but may also be more volatile during downturns.

• High Capital Intensity: Companies in the capital goods sector usually operate with high capital intensity. This means they require substantial investments in equipment, machinery, and facilities to run their operations. While this can lead to significant capital expenditures, it also often results in substantial barriers to entry, reducing competition and potentially increasing profitability for established players.

• Technological Innovation: The capital goods sector is often at the forefront of technological innovation. Companies in the capital goods share list frequently invest in research and development to create cutting-edge products and solutions. This focus on innovation can lead to high growth potential, as new technologies can drive demand and open up new market opportunities.

• Infrastructure Dependency: Capital goods companies are closely tied to infrastructure development. Whether it’s building bridges, manufacturing industrial machinery, or creating energy solutions, these firms play a crucial role in the development and maintenance of infrastructure. As a result, their performance can be closely linked to public and private infrastructure spending trends.

Who Should Invest in Capital Goods Stocks

Understanding who should consider investing in the top 10 capital goods stocks in India is crucial for making informed decisions. Investing in capital goods stocks on the NSE can be a strategic move for those looking to diversify their portfolio and capitalise on the growth potential within this sector. But who should consider adding these stocks to their investment mix?

1. Long-Term Investors

Capital goods companies typically have long investment horizons driven by large-scale infrastructure projects, technological advancements, and economic cycles. If you are a long-term investor with a focus on sustained growth and stability, capital goods stocks may align well with your investment goals. These stocks often benefit from infrastructure spending and industrial expansion, which can provide steady returns over time.

2. Investors Seeking Exposure to Economic Growth

Companies in the capital goods sector is closely tied to economic development and industrial progress. Investors who believe in the long-term growth of the economy and are looking to benefit from sectors that drive this growth might find capital goods stocks particularly appealing. The performance of these stocks often mirrors the health of the broader economy, making them a valuable addition to a growth-oriented portfolio.

3. Investors with a Tolerance for Cyclical Fluctuations

The capital goods sector is known for its cyclical nature, with performance often influenced by economic upswings and downturns. If you have a tolerance for these fluctuations and a strategic approach to managing them, capital goods stocks can offer substantial returns during periods of economic expansion. This sector’s inherent volatility can also present opportunities for savvy investors who can navigate its ups and downs.

4. Individuals Interested in Infrastructure and Technological Advancements

For those who are keen on investing in sectors driving infrastructure development and technological innovation, capital goods stocks are a natural fit. Companies in this sector often lead in developing new technologies and infrastructure projects, which can be both exciting and profitable areas to invest in.

Factors Affecting Capital Goods Stocks

Investing in capital goods sector shares isn’t just about numbers; it’s about understanding the big picture. Let’s dig into the driving forces behind these stocks – the ones that shape their destiny.

• Economic Conditions and Business Cycles: Think of it as a dance with the economy. When times are good, businesses and governments gear up for expansion.
• Technological Advancements and Innovation: Here’s the innovation game. Embracing tech trends isn’t just a choice; it’s survival. Companies riding the tech wave often surge ahead. Imagine smarter machines and sleeker processes – it all translates to better business. Fall behind, and it’s easy to lose your grip on the market.
• Government Policies and Infrastructure Spending: Picture this – the government decides to boost infrastructure, construction, or manufacturing. Bam! Demand for capital goods shoots up. However, if policies change, budgets shrink, or projects stall, the demand rollercoaster can take a hit. Staying in the know about government moves is a must.

Advantages of Investing in Capital Goods Stocks

The top 10 capital goods stocks in India come with a range of advantages like the ones listed below:

• Potential for Growth: Capital goods companies are like the unsung heroes behind major infrastructure and industrial developments. When economies are on the rise, the demand for capital goods skyrockets. Thus, this can offer a promising avenue for companies in this sector to increase their revenues. Investing in established capital goods shares could potentially turn out to be your ticket to long-term growth.
• Cyclical Opportunities: Capital goods shares have a knack for riding the economic waves. They often perform better during times of economic recovery and expansion. Thus, this means you might get a chance to take advantage of the uptick in demand for construction, manufacturing, and other industrial projects.
• Dividends on the Table: Keep an eye out for capital goods companies that have a habit of sharing their profits with shareholders through dividends. If you’re into both potential price appreciation and getting regular income, dividend-paying capital goods stocks could hit the sweet spot.

Risks of Investing in Capital Goods Stocks

Along with the benefits, capital goods stocks also come with some risks and disadvantages. These include:

• Economic Rollercoasters: Be ready for a bumpy ride. When the economy hits a downturn or takes a dip, capital goods stocks can feel the pinch as infrastructure and industrial projects take a hit. Lower demand could lead to decreased revenue and profitability for these companies, translating into drops in capital goods share price.
• Wild Market Swings: Brace yourself for some market rollercoaster moments. Factors like shifts in demand, tech advancements, and government decisions can send capital goods stock prices on a wild ride. Just remember, while short-term ups and downs can be nerve-wracking, focusing on the long term is the name of the game.
• Competition and the Tech Race: Think of the capital goods sector as a high-stakes game of innovation and competition. Companies are constantly battling it out for projects and contracts. And with technology evolving at a rapid pace, failing to keep up with capital goods could put a dent in a company’s growth potential.
• Red Tape and Political Tug-of-Wars: Navigating regulations and politics is no small feat for capital goods companies. Their operations are subject to government policies, permits, and standards. Thus, the changes in these realms or political unrest can throw a wrench in their works and, in turn, affect stock performance.

To Wrap It Up…

In conclusion, navigating the world of capital goods stocks requires a blend of strategic insight and a keen awareness of industry dynamics. The top 10 capital goods stocks in India represent a diverse range of opportunities for investors. These stocks hold a pivotal role in shaping economies and industries. Keeping an eye on the capital goods share price of the top stocks in India will help you make well-informed investment decisions. 

Whether you’re considering investment opportunities or expanding your knowledge, remember that the capital goods sector stocks demand vigilance, adaptability, and a strong understanding of market trends. Therefore, by embracing these insights and maintaining a proactive approach, investors can harness the potential of capital goods stocks while effectively managing risks.

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