Dalal Street Investment Journal – July 20, 2019

DSIJ.in JULY 22 - AUG 4, 2019 I DALAL STREET INVESTMENT JOURNAL (^69)
respectively. Windsor Machines, Skipper and Alphageo (India)
reported de-growth in net revenues of 12.25 per cent, 11.23 per
cent and 5.67 per cent, respectively.
The operating profits in the sector showcased an average
growth of 21.68 per cent YoY in FY19. WPIL reported an
impressive growth in operating profit of 141.30 per cent YoY in
FY19 to `234.01 crore. Other companies that showcased good
growth in operating profits include L&T Technology Services
(58.91 per cent), Praj Industries (54.02 per cent),
Disa India (57.16 per cent) and Kirloskar Industries
(92.44 per cent).
On an average, net income in the sector exhibited growth of
35.41 per cent YoY in FY19. Elecon Engineering and Yuken
India showcased an astounding rise in net profit of 1285.98 per
cent YoY and 1561.92 per cent YoY in FY19. WPIL, Kirloskar
Industries, Mahindra EPC Irrigation, Everest Kanto Cylinder
and TIL recorded growth of 335.87 per cent, 93.59 per cent,
131.71 per cent, 167.97 per cent and 205.54 per cent,
respectively.
The major demand drivers in the engineering sector include
capacity creation in sectors such as infrastructure, power and
more. Moreover, the approval of a substantial number of Special
Economic Zones (SEZs) across India along with the
development of the Delhi Mumbai Industrial Corridor (DMIC)
across seven states is likely to lend a further boost to the
engineering sector. Another positive development is that the
allocation to the defence sector was raised to US$ 45.6 billion
under the Union budget in 2018-2019. Furthermore, the
Ministry of Defence has relaxed its procurement norms,
thereby making it a lot easier for Indian engineering firms and
Top 10 by Market Cap Bottom 10 by Market Cap
Company Name FY19 Simple Returns Company Name FY19 Simple Returns
Bharat Electronics -34.32 Everest Kanto Cylinder -35.75
Bharat Heavy Electricals -7.99 Alphageo (India) -35.82
L&T Technology Services 26.74 TIL -43.27
AIA Engineering 25.44 Kabra Extrusiontechnik -28.16
Thermax -14.02 Salasar Techno Engineering -33.22
Engineers India -26.00 Eimco Elecon (India) -6.77
Elgi Equipments -4.04 Roto Pumps 18.16
BEML -2.95 Pritika Auto Industries -11.53
Nesco -12.67 SKIL Infrastructure -57.54
ISGEC Heavy Engineering -7.01 International Conveyors 12.47
start-up ventures to offer equipment, ammunition and
associated products to the Indian armed forces.
Overall, the sector witnessed an uptick in execution on account
of aggressive capacity expansion across numerous sectors. The
inflow of private capex, which has slowed over FY13 to FY18, is
now showcasing an improving trend.
Moving forward, India’s manufacturing sector could very
well reach US$ 1 trillion by 2025 and could account for as
much as 25 per cent to 30 per cent of India’s GDP. Initiatives
like ‘Make in India’ in conjunction with 100 per cent foreign
direct investment (FDI) permitted through the automatic
route have engendered a multitude of opportunities in the
country. This has attracted several international players to the
Indian market.
The demand drivers in the engineering sector
include capacity creation in sectors. The
approval of SEZs across India along with the
development of the DMIC across seven states is
likely to lend a further boost to the engineering
sector. Another positive development is that the
allocation to the defence sector was raised to
US$ 45.6 billion under the Union budget in
2018-2019.