The capital goods sector demonstrated robust performance in Q1FY27, with order inflows growing 15-20% year-on-year across the space, driven by strong private sector capex and positive management commentary. According to Business Standard, revenues grew by 11% in Q1FY27, with execution remaining strong despite margin pressures from higher commodity prices and logistics costs. Private sector ordering saw a pickup across industrial, transmission, power generation, and data centres, with EPC companies claiming that private sector orders form 40% of their book. Companies like ABB reported a 50% year-on-year rise in order intake, while BHEL secured a book of ₹2.6 trillion, offering multi-year revenue visibility.
Power transmission & distribution (T&D), data centres and defence are emerging as key sectors placing more orders in the near term, as reported by Business Standard. Data centres are a near-term demand driver, with companies like ABB, Siemens, Cummins, CG Power, Thermax, and Triveni Turbine citing data centre-related business prospects. Transmission ordering should pick up from Q2, while defence ordering may also accelerate. The sector continues to benefit from strong data centre demand, with companies seeing healthy enquiries or execution. Private sector capex remains strong, with the government achieving 28% of the FY27 capex target (versus 24.5% in the corresponding period of FY26), with approximately ₹3.4 trillion spent.
EBITDA margins were under pressure from high commodity prices, currency movements, and logistics costs, according to Business Standard. However, commodity prices have started moderating, and companies like ABB, Siemens, Cummins and CG Power have taken price hikes. The benefit of price hikes plus moderating prices may show up in Q3. West Asia disruptions led to deferred revenue and high freight and supply chain costs may hit Q2FY27. Companies are looking to deleverage, with KEC International managing to cut ₹1,200 crore in debt during FY27. Siemens Energy India saw gross margins up 340 bps year-on-year, with operating leverage expanding EBITDA margins by 450 bps to 23.6%.
The construction equipment industry has raised its FY27 domestic sales growth forecast to 9-12% year-on-year from an earlier estimate of around 7%, according to Business Standard. Deepak Shetty, president of ICEMA, attributed this improvement to improved infrastructure project execution across certain states over the past three months. This represents a significant turnaround for the industry, which had declined 6.7% year-on-year to 113,229 units in FY26 due to slower project execution and higher equipment prices. The industry also expects strong export growth of around 30% in FY27, with Indian equipment seeing strong demand in Africa, Southeast Asia and Latin America. Exports to the US have started recovering as tariff situations improved, with US tariffs falling from around 50% to around 15%.
