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capital investments in the last few years.
India Inc has outlined capital investment plans of Rs 14 lakh crore over the next decade. Interestingly, most of them are in capital-intensive sectors such as power, energy, digital infrastructure and sectors eligible for manufacturing-related incentive schemes such as electronics, chemicals and pharmaceuticals.
The data show that the private sector announces capital investment plans during April-November
the FY23 period is much larger than the pre-pandemic period.
Private companies announced total capital expenditure of Rs 8.5 lakh crore in April-November FY23, compared to Rs 5.6 lakh crore in 2020, according to Nirmal Bang Institutional Equities.
This was led by the chemical sector, which accounts for around 45% of total projects by value. It is interesting that another 35% of projects by value come from the sector of renewable energy sources.
Mukesh Ambani led
and Gautam Adani-owned have jointly announced plans to invest Rs 7.5 lakh crore in green energy over the next 10 years.
According to the brokerage
combined capex by listed companies and the government is on track to cross Rs 21 lakh crore in FY23, with strong demand for real estate and the credit cycle.
Where should investors bet their money?
While there has been a lot of volatility in global markets, in India, sectors related to the domestic economy have done phenomenally well in 2022.
Stocks like Larsen & Toubro,
Adani Green Energi, Reliance Industries, Bharat Forge, , and have gained 14-145% in the last year, outperforming the benchmark Nifti 50 which has gained around 10% over the same period.
There has been a paradigm shift in investment bets towards equities in capital-intensive sectors due to strong domestic macroeconomic factors, improving corporate earnings and strong balance sheets.
“In the post-Covid environment, demand has come back much faster and stronger than anyone anticipated or expected, leading to significantly higher capacity utilization for most sectors in the manufacturing space,” said Sachin Shah, fund manager at Emkai . Investment managers.
“These factors have created a very strong foundation for the entire manufacturing sector to leap into the next phase of a high growth era in the next 5-10 years,” added Shah.
L&T, Thermak and Container Corp of India are top picks for brokerage Jefferies India to play on India’s growth story.
“We believe the non-core investment peak is behind us and L&T has the potential to surprise in terms of execution and order flow expectations,” Jeffries said. It has a target of Rs 2,455 on the stock, implying a potential upside of around 15%.
For ICICI Securities, the best choices from a capital investment and credit cycle perspective are
L&T, NTPC, , NHPC, , , , , , GAIL, , Gujarat Fluorochemicals and .
(Disclaimer: The recommendations, suggestions, views and opinions of the experts are their own. They do not represent the views of the Economic Times)
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