India’s Capital Goods Companies to See 9-11% Revenue Growth in 2025: CRISIL Ratings
India’s capital goods companies are projected to achieve a revenue increase of 9-11% in fiscal 2025, building on the anticipated 13% growth in fiscal 2024, according to CRISIL Ratings. Leading manufacturers are poised for sustained double-digit revenue growth amidst robust government and private sector spending.
Key Growth Drivers
Significant investments across critical sectors such as railways, defence, and both conventional and renewable energy segments are driving this growth. Government spending on railways surged by 28% year-on-year in fiscal 2024, while defence saw a 10% increase. Conventional sectors expanded their capital expenditure by 6-8%, with renewable energy investments spiking by 18%.
Order Book Growth
The capital goods industry’s order books grew by over 15% in fiscal 2024, amounting to 2.5-3.0 times their revenue. This surge in orders reflects a buoyant market demand and underscores the sector’s pivotal role in India’s infrastructure development.
Expert Insights
Aditya Jhaver, Director at CRISIL Ratings, highlighted the sector’s resilience, stating, “Private sectors’ continued capital outlays in conventional sectors (6-8% on-year rise) supported by a ramp-up in the commissioning of renewable capacities (25-30% on-year rise) augur well for the prospects of capital goods companies.”
Joanne Gonsalves, Associate Director at CRISIL Ratings, noted, “Such increased business intensity would necessitate larger working capital requirements. Yet, the credit profile of capital goods manufacturers is likely to remain ‘stable’, as healthy accruals and moderate capital spends would support debt metrics.”
Future Prospects
The implementation of Production-Linked Incentive (PLI) schemes and emerging sectors like electric vehicles and data centers are expected to further drive growth. These sectors, which constituted approximately 10% of investments in fiscal 2024, are projected to rise to 25% by fiscal 2028.
Risks
While the outlook remains positive, potential delays in capital expenditures by end-user industries and the industry’s ability to meet evolving technological demands in emerging sectors pose monitorable risks.
