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PL Capital Report
PL Capital expects its capital goods coverage universe to report mixed performance in Q4 FY26 driven by-
- healthy execution momentum across T&D-led product companies;
- strong domestic execution for T&D-focused EPC players, while international business may face headwinds amid ongoing Middle East geopolitical tensions;
- some softness in defense segment due to supply chain disruptions, but strong order visibility;
- continued sluggishness in export-oriented businesses due to delays in dispatches and order finalisation amid the Middle East conflict; and
- persistent softness in consumables companies.
Overall, the brokerage expects Q4 FY26 revenue/Ebitda growth of 10.6%/6.9% YoY (12.4%/6.6% YoY excluding L&T), led by healthy execution in T&D-led product companies, partly offset by softness in defense and EPC segments.
Geopolitical tensions lead to slippage in execution, supply chain disruptions and delay in order finalisations, which are likely to impact the export business of many of the brokerage's coverage companies.
Larsen & Toubro, Ingersoll-Rand India and Voltamp Transformers are among PL Capital's top picks in the sector.
Top picks
Larsen & Toubro:
PL Capital believes L&T is well-placed to benefit from strong international prospects led by the Middle East; however, given the current geopolitical situation, execution in the region (~37% of the total order book) may face near-term headwinds, which remain a key monitorable.
The divestment of non-core development assets such as Hyderabad Metro and Nabha Power will aid the next phase of growth. The divestment will help improve its balance sheet and return ratios while also enabling incremental investments in new emerging areas such as green energy, electrolyzers, semiconductors, and data centers.
The brokerage expects the company to report revenue/adj PAT CAGR of 14%/22% over FY25-28E.
PL Capital maintains ‘Buy' rating on the stock valuing the core business at PE of 22x Sep'27E, arriving at SoTP-derived target price of Rs 4,806.
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