The operating margin could moderate by 80-100 basis points to 12-13 per cent in FY25 as the market scenario remains highly competitive and exports, which offer higher margins, remain sluggish even as Raw material prices (mainly steel, copper and aluminum) are stable, according to a CRISIL Ratings report.
That said, modest capital expenditure (capex) and continued lower reliance on debt will support credit profiles, he added.
"Continued private sector capital outlays in conventional sectors (6-8 percent, YoY increase) supported by an increase in commissioning of renewable capacities (25-30 percent YoY increase) bode well for the real estate capital prospects," said Aditya Jhaver, Director, CRISIL Ratings.
Although investment in railways and defense has moderated to 5 per cent year-on-year from the highs of 20 per cent seen in the last fiscal year, metropolitan infrastructure development in several cities should see good traction.
"Net-net, we expect overall revenue growth of 9-11 per cent for capital goods companies in this fiscal year," Jhaver said.
The revenue growth boost for capital goods players will also be supported by investments in production-linked incentive (PLI)-driven schemes, as well as in emerging sectors such as electric vehicles and data centres, where they could Growth opportunities arise in terms of the provision of automation and digitalization services. and establishment of charging networks.
"These sectors (PLI-driven schemes and emerging sectors), which accounted for 10 per cent of investments in FY2024, are expected to rise to 25 per cent by FY2028," the report mentions.
According to Joanne Gonsalves, Associate Director, CRISIL Ratings, the credit profile of capital goods manufacturers is likely to remain "stable" as healthy accruals and moderate capex would support debt metrics.
That said, modest capital expenditure (capex) and continued lower reliance on debt will support credit profiles, he added.
"Continued private sector capital outlays in conventional sectors (6-8 percent, YoY increase) supported by an increase in commissioning of renewable capacities (25-30 percent YoY increase) bode well for the real estate capital prospects," said Aditya Jhaver, Director, CRISIL Ratings.
Although investment in railways and defense has moderated to 5 per cent year-on-year from the highs of 20 per cent seen in the last fiscal year, metropolitan infrastructure development in several cities should see good traction.
"Net-net, we expect overall revenue growth of 9-11 per cent for capital goods companies in this fiscal year," Jhaver said.
The revenue growth boost for capital goods players will also be supported by investments in production-linked incentive (PLI)-driven schemes, as well as in emerging sectors such as electric vehicles and data centres, where they could Growth opportunities arise in terms of the provision of automation and digitalization services. and establishment of charging networks.
"These sectors (PLI-driven schemes and emerging sectors), which accounted for 10 per cent of investments in FY2024, are expected to rise to 25 per cent by FY2028," the report mentions.
According to Joanne Gonsalves, Associate Director, CRISIL Ratings, the credit profile of capital goods manufacturers is likely to remain "stable" as healthy accruals and moderate capex would support debt metrics.
