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Economic Times
3 days ago
- Business
- Economic Times
Nirmala Sitharaman backed consumption over capex. But guess who's making billions
Four months after Finance Minister Nirmala Sitharaman's Union Budget appeared to pivot policy focus towards consumption, the real winners in the market have emerged from an unlikely corner: capital goods. ADVERTISEMENT Despite a budget speech that dialed back aggressive infrastructure spending in favour of easing middle-class tax burdens and supporting household demand, capital expenditure stocks have not only held their ground but have outperformed. The BSE Capital Goods Index has soared 10% since Budget Day, trouncing the Nifty India Consumption Index, which managed a muted 3% rise, and even outperformed the Nifty 50's 5% climb. The rally in capital goods stocks has added a staggering Rs 1.85 lakh crore in market value. Leading the pack is Hitachi Energy India, with a 54% surge. Defence heavyweights like Bharat Dynamics (up 49%), BEL (33%), and HAL (26%) have also posted stellar returns. Other notable gainers include Schaeffler India, BHEL, Kaynes Tech, SKF India, GMR Airports, Suzlon Energy, and Inox Wind—all of which have clocked double-digit gains. Meanwhile, the consumption story hasn't lived up to the Budget's optimism. The Nifty India Consumption Index has underperformed broader markets. Varun Beverages and Colgate-Palmolive have posted double-digit declines.'The mix of cheaper starting prices, accelerating earnings, and stronger order pipelines explains why capital goods stocks have outperformed consumption,' Anoop Vijaykumar, Head of Equity at Capitalmind Mutual Fund told ET pointed to multi-year high order books at engineering firms and the RBI's OBICUS survey showing manufacturing capacity utilisation at 75.4% in Q3 FY25—the highest in six years—as signs that the industrial engine is firing on all cylinders. ADVERTISEMENT Also read | Sensex will hit 1.5 lakh by 2030 & 3 lakh by 2035! Raamdeo Agrawal makes big prediction 'Policy support for railways, defence, renewables and the PLI 2.0 schemes has not slowed; these programmes are multi-year and continue. Meanwhile, the consumption complex faces a softer near-term backdrop: rural volumes are only just turning positive, urban discretionary demand is normalising after two strong years, and the sector entered Budget season on richer valuations,' Vijaykumar added. ADVERTISEMENT Dhiraj Relli, MD & CEO of HDFC Securities, echoed the sentiment, calling the capital expenditure revival a "multi-year" phenomenon. 'Between FY21 and FY25E, private sector capex has grown at 19.8% CAGR. The momentum is likely to intensify in FY26, driven by domestic manufacturing, continued government infrastructure initiatives, and healthy corporate balance sheets,' he the flip side, Relli flagged that consumption faces headwinds from 'sluggish urban demand, delayed rural recovery, and persistent inflation.' While tax reductions and early signs of rural revival offer a glimmer of hope, margin pressure and steep valuations may limit upside. ADVERTISEMENT So is the capex story here to stay? Vijaykumar believes it is. 'The central government has already budgeted over Rs 11 lakh crore of infrastructure spending for FY26, while states and CPSEs have pencilled in similar growth. Private sector intent is also strengthening with new project announcements rising in double digits,' he said. With healthy corporate balance sheets and a banking system ready to fund fresh investments, 'the investment cycle is broadening rather than peaking.'Venugopal Manghat, CIO – Equity at HSBC Mutual Fund, is selectively bullish within capex. 'We like power, manufacturing and defence over roads and railways. Ongoing liquidity infusion by RBI, expected rate cuts, and regulatory easing should support NBFCs and banks,' he the consumption front, Manghat is cautious on staples. 'The sector has seen disruption from tech and new formats. With higher disposable incomes, households are shifting toward aspirational and discretionary spending,' he said. He sees greater opportunity in small-cap consumer discretionary plays, citing low penetration and a large unorganised-to-organised transition in the space. ADVERTISEMENT The scorecard since the Budget is clear: while policy seemed to back the consumer, the market has placed its bets on industrial India. And for now, capex is delivering the returns. Also read | Neither largecaps, nor smallcaps! India Inc's Q4 result season belongs to the middle order (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
3 days ago
- Business
- Time of India
Nirmala Sitharaman backed consumption over capex. But guess who's making billions
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Four months after Finance Minister Nirmala Sitharaman's Union Budget appeared to pivot policy focus towards consumption, the real winners in the market have emerged from an unlikely corner: capital a budget speech that dialed back aggressive infrastructure spending in favour of easing middle-class tax burdens and supporting household demand, capital expenditure stocks have not only held their ground but have outperformed. The BSE Capital Goods Index has soared 10% since Budget Day, trouncing the Nifty India Consumption Index, which managed a muted 3% rise, and even outperformed the Nifty 50's 5% rally in capital goods stocks has added a staggering Rs 1.85 lakh crore in market value. Leading the pack is Hitachi Energy India , with a 54% surge. Defence heavyweights like Bharat Dynamics (up 49%), BEL (33%), and HAL (26%) have also posted stellar returns. Other notable gainers include Schaeffler India BHEL , Kaynes Tech, SKF India Suzlon Energy , and Inox Wind—all of which have clocked double-digit the consumption story hasn't lived up to the Budget's optimism. The Nifty India Consumption Index has underperformed broader markets. Varun Beverages and Colgate-Palmolive have posted double-digit declines.'The mix of cheaper starting prices, accelerating earnings, and stronger order pipelines explains why capital goods stocks have outperformed consumption,' Anoop Vijaykumar, Head of Equity at Capitalmind Mutual Fund told ET pointed to multi-year high order books at engineering firms and the RBI's OBICUS survey showing manufacturing capacity utilisation at 75.4% in Q3 FY25—the highest in six years—as signs that the industrial engine is firing on all cylinders.'Policy support for railways, defence, renewables and the PLI 2.0 schemes has not slowed; these programmes are multi-year and continue. Meanwhile, the consumption complex faces a softer near-term backdrop: rural volumes are only just turning positive, urban discretionary demand is normalising after two strong years, and the sector entered Budget season on richer valuations,' Vijaykumar Relli, MD & CEO of HDFC Securities, echoed the sentiment, calling the capital expenditure revival a "multi-year" phenomenon. 'Between FY21 and FY25E, private sector capex has grown at 19.8% CAGR. The momentum is likely to intensify in FY26, driven by domestic manufacturing, continued government infrastructure initiatives, and healthy corporate balance sheets,' he the flip side, Relli flagged that consumption faces headwinds from 'sluggish urban demand, delayed rural recovery, and persistent inflation.' While tax reductions and early signs of rural revival offer a glimmer of hope, margin pressure and steep valuations may limit is the capex story here to stay? Vijaykumar believes it is. 'The central government has already budgeted over Rs 11 lakh crore of infrastructure spending for FY26, while states and CPSEs have pencilled in similar growth. Private sector intent is also strengthening with new project announcements rising in double digits,' he said. With healthy corporate balance sheets and a banking system ready to fund fresh investments, 'the investment cycle is broadening rather than peaking.'Venugopal Manghat, CIO – Equity at HSBC Mutual Fund, is selectively bullish within capex. 'We like power, manufacturing and defence over roads and railways. Ongoing liquidity infusion by RBI, expected rate cuts, and regulatory easing should support NBFCs and banks,' he the consumption front, Manghat is cautious on staples. 'The sector has seen disruption from tech and new formats. With higher disposable incomes, households are shifting toward aspirational and discretionary spending,' he said. He sees greater opportunity in small-cap consumer discretionary plays, citing low penetration and a large unorganised-to-organised transition in the scorecard since the Budget is clear: while policy seemed to back the consumer, the market has placed its bets on industrial India. And for now, capex is delivering the returns.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Mint
06-05-2025
- Business
- Mint
Q4 earnings watch: Consumption giants drive revenue but lag in profits
Consumption-focused companies drove a significant share of revenue growth for India Inc. in the March quarter (Q4), the final leg of fiscal year 2024-25, even as profit growth lagged. In contrast, non-consumption sectors turned in more robust bottomlines, pointing to a shifting dynamic in corporate performance. This divergence—where consumption-led firms maintained sales momentum but ceded ground on profitability—underscores how rising input costs and tepid urban demand are squeezing margins, even as pricing actions helped protect revenues. Read this | Can an early summer thaw India's consumption slowdown? A Mint analysis of 13 consumption-driven companies from the Nifty India Consumption Index, which includes firms deriving over half their revenue from domestic demand, shows aggregate revenue grew 11.9% year-on-year. While this double-digit growth outpaced the broader India Inc., which posted just 2.9% growth, it was slower than the December quarter's performance. The analysis, based on standalone data from the Capitaline database, examined the latest quarterly earnings of 439 listed companies that have declared results so far. Analysts note that price increases have helped sustain volumes, and the trend is expected to continue in the coming quarters. Even so, the data comes against the backdrop of a broader consumption slowdown. While consumption-led companies managed to maintain their revenue momentum, profitability told a different story. Net profit growth in this cohort slowed to 6.9% in Q4FY25, down sharply from 21.6% in the December quarter. In contrast, the rest of India Inc. posted stronger bottomline growth of 9.5%. A company-wise breakdown shows that only four of the 13 firms—Adani Power, Maruti Suzuki, Nestle India, and Trent—reported a decline in net profits, pulling down the segment's overall earnings performance. Read this | Zudio, Trent's greatest strength, may also be its biggest weakness A detailed company-wise performance of all consumption-led companies revealed that only four of the 13 companies reported a decline in their bottom line numbers that slowed the samples' overall net profit growth. These included Adani Power , Maruti Suzuki, Nestle India, and Trent . Among these underperformers, Adani Power faced particular challenges. After managing to record some profit growth in the December quarter, the company experienced a profit contraction in the March quarter. Nevertheless, this contraction was significantly less severe than what the company witnessed during the first half of the fiscal year. The Adani Group's energy subsidiary also recorded negative revenue growth in Q4, in-line with the trend of double-digit revenue contraction observed in the first half of the fiscal year. Tata Group-owned retailer, Trent, also reported its first profit contraction in the March quarter, following robust profit performance in the first three quarters of the fiscal year. Also read | Price hikes and premium push: What explains automakers' latest moves? Meanwhile, large-cap staples like Hindustan Unilever and Avenue Supermarts posted muted profit growth of 3-4%. On the brighter side, the remaining seven firms delivered strong double-digit earnings growth, led by Tata Consumer Products. This is the eighth part of a series of data stories about the ongoing Q4 earnings season. Read previous parts of our earnings series here .
