Upto 80% upside potential: HAL, BEML, BEL, LG India, RITES, Zen Tech among top stock picks
Elara Capital sees up to 80% upside potential in stocks from defence and capital goods segment including names likes RITES, Bharat Electronics, HAL, LG Electronics India and more
- Apr 7, 2026,
- Updated Apr 7, 2026 9:55 AM IST
Domestic brokerage firm Elara Capital remains largely constructive on capital goods, defence and consumer durable sectors as it sees inflows falling but execution remaining steady. The brokerage pegs growth likely to be mixed in Q4 for durables and EMS to grow steadily.
Order inflows for Indian capital goods companies, (ex Larsen & Toubro Ltd), increased by 95 per cent year-on-year (YoY) in Q4FY26E, according to a report by Elara Capital. This excludes the LCH Prachand order won by Hindustan Aeronautics Ltd (HAL) and large orders secured by Bharat Heavy Electricals Ltd (BHEL) in the base quarter. Defence inflows declined 72 per cent YoY.
Elara Capital expects the capital goods sector to record 7 per cent sales growth in Q4FY26E, while consumer electricals are projected to post a 12 per cent YoY increase. Large companies may face minimal production issues, but smaller firms could experience disruptions due to limited LPG availability amid commodity inflation and currency volatility.
Major capital goods companies, announced cumulative orders worth Rs 64,350 crore in Q4, down 53 per cent YoY on a high base. BHEL secured large orders worth Rs 24,400 crore. Defence order inflows declined 72 per cent YoY to Rs 21.940 crore, while capital goods inflows dropped 26 per cent to Rs 42,410 crore.
Elara Capital forecasts 7 per cent revenue growth for the capital goods sector in Q4FY26E, supported by a healthy order book and steady execution. ABB India Ltd is expected to post 8 per cent revenue growth, led by electrification, while Siemens Ltd may see a 6 per cent rise driven by mobility projects amid slow private capital expenditure.
Thermax Ltd and Cummins India Ltd are projected to grow 9 per cent and 14 per cent respectively, backed by industrial products and power generation. KEC International Ltd may grow 9 per cent, whereas KEI Industries' growth could slow to 16 per cent due to lower demand in cables and wires amid geopolitical tensions. BEML Ltd and RITES Ltd are expected to report 7 per cent and 27 per cent revenue growth, respectively.
Within the defence sector, Bharat Dynamics Ltd is forecast to increase sales by 24 per cent, while Garden Reach Shipbuilders & Engineers Ltd (GRSE) may see an 8 per cent decline. Bharat Electronics Ltd (BEL) is expected to grow sales by 10 per cent despite a high base, and HAL's revenue may fall 5 per cent due to delayed delivery of LCA MklA aircraft.
Zen Technologies revenue is likely to contract 35 per cent on lower inflows, while Solar Industries India Ltd may post a 39 per cent increase driven by strong defence execution. Elara Capital prefers BEML, BEL, Solar Industries, HAL, ZEN and Bharat Dynamics in the sector.
Consumer electricals, durables, and electronics firms are expected to grow sales by 12 per cent year-on-year in Q4FY26E, led by the electronics segment. The room air conditioner market is projected to rise by low to mid double digits. Commodity inflation and currency volatility may reduce margins by 50 to 150 basis points, impacting earnings.
Voltas Ltd and LG Electronics India Ltd are forecast to post 11 per cent and 9 per cent revenue growth respectively. Amber Enterprises and Kaynes Technology Ltd may see revenue increases of 19 per cent and 56 per cent, respectively driven by electronics demand and industrial orders. Dixon Technologies (India) Ltd is expected to grow 5 per cent.
V-Guard Industries, Havells India Ltd, Polycab India Ltd, Crompton Greaves Consumer Eletricals Ltd and Eureka Forbes are also projected to report steady growth. Elara Capital prefers Voltas, LG Electronics and Eureka Forbes in the consumer electricals segment. Risks remain from commodity inflation, currency fluctuations and geopolitical tensions, which may affect margins and execution.
Overall, Elara Capital expects the capital goods sector to maintain steady growth driven by a strong order book and execution, while consumer electricals benefit from rising demand despite margin pressures. The report underscores the importance of monitoring sector-specific drivers and risks in the coming quarters.
Elara has a 'buy 'rating on Solar Industries (Target Price: 15,450), Kaynes Technologies (Target Price: 5,698), Amber Enterprises (Target Price: 9,625), Crompton Greaves (Target Price: 410), KEC International (Target Price: 930), BEML (Target Price: 2,707), Zen Technologies (Target Price: 2,026), RITES (Target Price: 310), Eureka Forbes (Target Price: 750), suggesting up to 80 per cent rise.
It has an 'accumulate' rating on Bharat Electronics (Target Price: Rs 478), HAL (Target Price: Rs 4,700), Cummins India(Target Price: Rs 4,780), Polycab India (Target Price: 8,180), Siemens (Target Price: 3,420), LG India (Target Price: 1,750), Havells (Target Price: 1,620), Dixon Tech (Target Price: 12,000), Bharat Dynamics (Target Price: 1,580), Voltas (Target Price: 1,440) and KEI (Target Price: 4,575) and V-Guard (Target Price: 400).
Elara Capital has a 'reduce' rating on only three stocks from this space. They include, ABB India (Target Price: 5,800), Garden Reach Shipbuilders & Engineers (Target Price: 2,300) and Thermax(Target Price: 2,870).
Domestic brokerage firm Elara Capital remains largely constructive on capital goods, defence and consumer durable sectors as it sees inflows falling but execution remaining steady. The brokerage pegs growth likely to be mixed in Q4 for durables and EMS to grow steadily.
Order inflows for Indian capital goods companies, (ex Larsen & Toubro Ltd), increased by 95 per cent year-on-year (YoY) in Q4FY26E, according to a report by Elara Capital. This excludes the LCH Prachand order won by Hindustan Aeronautics Ltd (HAL) and large orders secured by Bharat Heavy Electricals Ltd (BHEL) in the base quarter. Defence inflows declined 72 per cent YoY.
Elara Capital expects the capital goods sector to record 7 per cent sales growth in Q4FY26E, while consumer electricals are projected to post a 12 per cent YoY increase. Large companies may face minimal production issues, but smaller firms could experience disruptions due to limited LPG availability amid commodity inflation and currency volatility.
Major capital goods companies, announced cumulative orders worth Rs 64,350 crore in Q4, down 53 per cent YoY on a high base. BHEL secured large orders worth Rs 24,400 crore. Defence order inflows declined 72 per cent YoY to Rs 21.940 crore, while capital goods inflows dropped 26 per cent to Rs 42,410 crore.
Elara Capital forecasts 7 per cent revenue growth for the capital goods sector in Q4FY26E, supported by a healthy order book and steady execution. ABB India Ltd is expected to post 8 per cent revenue growth, led by electrification, while Siemens Ltd may see a 6 per cent rise driven by mobility projects amid slow private capital expenditure.
Thermax Ltd and Cummins India Ltd are projected to grow 9 per cent and 14 per cent respectively, backed by industrial products and power generation. KEC International Ltd may grow 9 per cent, whereas KEI Industries' growth could slow to 16 per cent due to lower demand in cables and wires amid geopolitical tensions. BEML Ltd and RITES Ltd are expected to report 7 per cent and 27 per cent revenue growth, respectively.
Within the defence sector, Bharat Dynamics Ltd is forecast to increase sales by 24 per cent, while Garden Reach Shipbuilders & Engineers Ltd (GRSE) may see an 8 per cent decline. Bharat Electronics Ltd (BEL) is expected to grow sales by 10 per cent despite a high base, and HAL's revenue may fall 5 per cent due to delayed delivery of LCA MklA aircraft.
Zen Technologies revenue is likely to contract 35 per cent on lower inflows, while Solar Industries India Ltd may post a 39 per cent increase driven by strong defence execution. Elara Capital prefers BEML, BEL, Solar Industries, HAL, ZEN and Bharat Dynamics in the sector.
Consumer electricals, durables, and electronics firms are expected to grow sales by 12 per cent year-on-year in Q4FY26E, led by the electronics segment. The room air conditioner market is projected to rise by low to mid double digits. Commodity inflation and currency volatility may reduce margins by 50 to 150 basis points, impacting earnings.
Voltas Ltd and LG Electronics India Ltd are forecast to post 11 per cent and 9 per cent revenue growth respectively. Amber Enterprises and Kaynes Technology Ltd may see revenue increases of 19 per cent and 56 per cent, respectively driven by electronics demand and industrial orders. Dixon Technologies (India) Ltd is expected to grow 5 per cent.
V-Guard Industries, Havells India Ltd, Polycab India Ltd, Crompton Greaves Consumer Eletricals Ltd and Eureka Forbes are also projected to report steady growth. Elara Capital prefers Voltas, LG Electronics and Eureka Forbes in the consumer electricals segment. Risks remain from commodity inflation, currency fluctuations and geopolitical tensions, which may affect margins and execution.
Overall, Elara Capital expects the capital goods sector to maintain steady growth driven by a strong order book and execution, while consumer electricals benefit from rising demand despite margin pressures. The report underscores the importance of monitoring sector-specific drivers and risks in the coming quarters.
Elara has a 'buy 'rating on Solar Industries (Target Price: 15,450), Kaynes Technologies (Target Price: 5,698), Amber Enterprises (Target Price: 9,625), Crompton Greaves (Target Price: 410), KEC International (Target Price: 930), BEML (Target Price: 2,707), Zen Technologies (Target Price: 2,026), RITES (Target Price: 310), Eureka Forbes (Target Price: 750), suggesting up to 80 per cent rise.
It has an 'accumulate' rating on Bharat Electronics (Target Price: Rs 478), HAL (Target Price: Rs 4,700), Cummins India(Target Price: Rs 4,780), Polycab India (Target Price: 8,180), Siemens (Target Price: 3,420), LG India (Target Price: 1,750), Havells (Target Price: 1,620), Dixon Tech (Target Price: 12,000), Bharat Dynamics (Target Price: 1,580), Voltas (Target Price: 1,440) and KEI (Target Price: 4,575) and V-Guard (Target Price: 400).
Elara Capital has a 'reduce' rating on only three stocks from this space. They include, ABB India (Target Price: 5,800), Garden Reach Shipbuilders & Engineers (Target Price: 2,300) and Thermax(Target Price: 2,870).