Order inflows at capital goods firms likely to decline in Q4FY22 – CASINOIN -Sports betting at the casinoin betting company,casinoin online betting, casinoin bookmaker line, casinoin bookmaker bonuses, casinoin bookmaker, casinoin bookmaker, casinoin sports betting, casinoin bookmaker, casinoin bookmaker,

With the momentum in awarding contracts slowing down, and big orders from the highways and railways sectors virtually missing, order inflows at capital goods companies are expected to see a decline of 20% year-on-year for the three months to March. This could leave the fresh order inflows for 2021-2022 flat.

Typically, the fourth quarter is the strongest quarter for the cap goods sector as companies — both public and private — try to finalise orders before the year ends. However, this year, the January-March period was somewhat dull even though the first half of the year saw good traction in fresh orders.

According to analysts, the Omicron wave in January and February was partly responsible for sluggish ordering environment. However, the major reason is that unlike in Q4FY21 — when orders by the National Highways Authority of India (NHAI) were bunched together — the quantum this time was smaller, Abhineet Anand, analyst at Emkay Global pointed out. Highway orders account for nearly 30% of the total orders.

Similarly, there was a decline in orders from other important sectors like railways, water and irrigation.
While tenders are being put out, the conversion into awards has slowed in the last four to five months. This delay has been attributed to the lack of visibility on the rising commodity prices. There are concerns about mismatches in the project cost at the contractors end. Even otherwise, there is typically a lag between the tendering and awarding that happens every few months.

With orders from the high-speed rail corridor, metro or highways, typically in the range of Rs 25,000 crore and above missing, the ticket size of orders shrank in Q4FY22. However, over the medium-term, the size of orders has been increasing from metros, high speed rail or long distance highways.

Larsen and Toubro (L&T) announced fresh orders of around Rs 47,000 crore in the March quarter, according to a domestic brokerage. This would be about 7% lower y-o-y as the company had reported new orders worth Rs 50,651 crore in Q4FY21. The company has guided it could close FY22 with a growth in order inflows of anywhere between low and mid-teens.

Bharat Electronics is expected to report an order intake of Rs 7,000 crore for Q4FY22. This would be less than half of Rs 15,280 crore worth of fresh orders bagged by the company during the fourth quarter last year. For KEC International, the order intake is likely to remain muted at about Rs 5,200 crore, a 3% y-o-y increase or a tad above Rs 5,000 crore orders recorded in Q4FY21.

Traction in orders from the domestic market remains strong from sectors such as infrastructure, data centres, railways, metros, pharmaceuticals, cement, chemicals, metal, mining and food and beverages.

The strong oil prices should see capital expenditure increasing in oil exporting regions like the Middle East. “On the exports front, the enquiry pipeline is strong from regions like Africa, ME, US, and SAARC. In our view, long term ordering activity is likely to remain strong considering strong tender pipeline, government thrust on overall infrastructure development and private capex picking up,” a report from Prabhudas Lilladher, stated.

Orders from government schemes and PSUs will continue to account for the bulk of orders even in FY22. Although there is an increase in private sector orders, from steel, cement and mining sectors, it would be early to call it a recovery. Some investments are expected via the PLI schemes, which are being evaluated by companies, but that could be some time away.



Author: Howard Caldwell