- UBS remains optimistic on Indian capital goods due to strong demand and order momentum
- Short-cycle and power segments lead early recovery in industrial products and equipment
- Private sector growth in defense and energy transition boosts multi-year pipelines
Global brokerage firm UBS has maintained an optimistic outlook on the Indian capital goods sector, noting that while valuations remain elevated across the board, structural demand drivers and accelerating order momentum continue to justify premium multiples. The demand revival led by short-cycle and power segments drove the sector's bull case for H1CY26.
In its latest sector review for the first half of calendar year 2026 (H1CY26), the brokerage highlighted improving demand dynamics across short-cycle industrial products. Early signs of a broader recovery are becoming evident, with low-voltage and medium-voltage equipment leading the turnaround. UBS noted that this early-stage rebound in factory-level and grid-level equipment demand points to sustained utilization and healthy operational expansion across core manufacturing industries.
ALSO READ: Stock To Buy On Raksha Bandhan: Sumeet Bagadia Picks This Real Estate Stock For Up To 17% Upside
Expanding Defense and Energy Transition Opportunities
Beyond traditional industrial applications, UBS pointed to substantial emerging growth vectors, most notably expanding opportunities for private players in the domestic defense ecosystem.
Rising indigenization, government thrust on domestic defense manufacturing, and active participation from private engineering firms are creating strong multi-year pipelines alongside clean energy and grid modernisation initiatives.
Order Momentum Backs Premium Multiples
While sector-wide valuations are trading above historical averages, the brokerage believes that the ongoing pace of order inflows and strong revenue visibility will provide adequate support to these premium multiples. The firm expects execution across industrial automation, transmission, and renewable equipment to stay resilient over the medium term.
Top Stock Picks
UBS identified its top preferred bets within the capital goods and infrastructure space:
- ABB India - Key beneficiary of industrial automation and electrification demand.
- Siemens - Strong play on digital industries, smart infrastructure, and mobility.
- CG Power and Industrial Solutions - Solid positioning in industrial motors, drives, and power equipment.
- Triveni Turbine - Niche leader benefiting from global and domestic industrial steam turbine demand.
- Premier Energies - Key player leveraged to solar manufacturing and clean energy infrastructure expansion.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
