Private Capex To Drive The Next Leg Of Growth; Anand Rathi Initiates Coverage On ABB, Cummins, Siemens

Anand Rathi Report

Digitalisation, de-carbonisation, de-globalisation, these 3Ds constitute the macro themes globally and are especially relevant in India today. These themes have been brewing but factors such as global warming, Covid-19 and the China+1 were catalysts.

The effect is that India today is on the path to its next industrial revolution, Industry 4.0. Multi-nationals are either ramping up capacity or setting up plants to transform India into another export hub for their global supply chains; small industries are moving up to mid-size, and mid-size to large, in the process creating momentum in the capex cycle.

This capex cycle is expected to be driven by core and new-age industries with impetus from public and private spending. However, till now, demand from many core industries has been subdued (cement, metal, mining, textiles, chemicals, pharma, etc.); meanwhile, demand from power transmission and distribution, urban infrastructure and the railways has been robust.

The latter falls under the purview of the government and has seenrecord investment. This, webelieve has created the perfect condition for pulling in private investment.

While the opportunity is immense, as we have not considered EV ecosystems, hydrogen-fuel cells, battery-storage solutions, etc., India Inc. has a strong enough balance sheet to undertake this investment. In the last 10 years of cumulative gross assets added by India Inc., the highest was in FY23 across sectors, followed by FY22.

Thus, we see an upward momentum in investments. We are initiating coverage on Siemens, ABB India Ltd. and Cummins India Ltd. as they have the widest range of products and solutions to cater to the swelling industrial demand and setsbase to explore various industrial segments.

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