PL Capital upgrades Hitachi Energy, Thermax; stays positive on L&T and Bharat Electronics

Résumé détaillé

PL Capital's Vice President of Institutional Research, Amit Anwani, upgraded Hitachi Energy India and Thermax to 'Buy', expects L&T to outperform its guidance and continues to prefer Bharat Electronics among defence stocks. While he sees near-term margin pressure for some industrial machinery companies, he expects profitability to improve in the fourth quarter.

Strong order books, improving execution and a favourable valuation have prompted PL Capital to upgrade Hitachi Energy India and Thermax, while maintaining a positive outlook on Larsen & Toubro (L&T) and Bharat Electronics (BEL), Amit Anwani, Vice President of Institutional Research at PL Capital, said.

Anwani expects L&T to exceed its 2026-27 (FY27) guidance despite concerns around the Karnataka government's reported move to blacklist the company over delays in the Jal Jeevan Mission. He also believes margin recovery for several industrial machinery companies could begin in the fourth quarter as recent price increases start flowing through to earnings.

He remains constructive on the capital goods and defence sectors, supported by healthy order pipelines, continued execution and upcoming project awards.

Anwani said the reported Karnataka issue is unlikely to materially impact L&T's overall business. "The portion is relatively smaller considering the overall order book which L&T has built up."

He noted that L&T reported more than 15% revenue growth, maintained stable margins and continued to report a healthy balance sheet.

While the company retained its guidance for over 10% order inflow and revenue growth, Anwani believes it can outperform those targets. "They maintained their guidances... but I think they'll easily surpass all these numbers."

On Hitachi Energy India, Anwani said the recent correction presents an opportunity after another quarter of strong execution.

The company reported 64% revenue growth and an adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 16.5%, while its order book expanded to nearly ₹33,000 crore.

He added that the base order inflow also remains healthy and expects several high-voltage direct current (HVDC) projects to be awarded over the next two to three years. "Very strong commentary, and they continue to deliver strong numbers."

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