Capital goods, defence sectors set for growth but margin pressures loom

India's capital goods and defence companies are expected to report growth in the September quarter, buoyed by robust order books and improving demand, according to Motilal Oswal Financial Services. The brokerage projects revenue growth of about 9.5 per cent, operating earnings growth of 10 per cent and profit growth of 9.8 per cent year-on-year, with operating margins remaining stable at 13 per cent.

Larsen & Toubro reported quarterly order inflows of around Rs 1 lakh crore, including hydrocarbon contracts in the Middle East and artificial intelligence infrastructure orders. KEC International and Kalpataru Projects International also secured significant orders. The Rs 1.86 lakh crore Green Energy Corridor Phase-III scheme and Defence Acquisition Council approvals of Rs 1.62 lakh crore provide further support.

However, high commodity prices and the continuing West Asia crisis could pressure costs and profit margins, offsetting growth gains.