BEL, L&T among SBI Securities top capital goods bets after Q1 earnings

India’s capital goods and manufacturing rally may still have room to run, with SBI Securities arguing that select order book-driven names in defence, engineering and power equipment remain well placed even after a sharp market re-rating. The brokerage’s latest preference list is led by Bharat Electronics Ltd (BEL), Larsen & Toubro (L&T), Siemens Energy and Cummins India, each backed by a distinct earnings or recovery trigger.

Defence remains the standout

Among the broader capital goods universe, defence continues to be the clearest conviction call. SBI Securities’ Sunny Agarwal said “defense as a pack is likely to continue their outperformance” in terms of earnings delivery, signalling confidence that execution momentum is intact despite the sector’s strong run-up.

Within that basket, BEL stands out. Agarwal noted that the stock saw profit-booking in the quarter “despite reporting a very good set of number,” suggesting the recent correction may be more technical than fundamental. That makes BEL a preferred idea for investors looking for exposure to sustained defence ordering and execution visibility.

L&T’s order pipeline stays robust

L&T remains another key recommendation, reflecting its diversified exposure across infrastructure, engineering and emerging growth segments. For the market, the bigger takeaway is that large project-led companies are still seeing healthy demand even in a volatile external environment.

Agarwal said that “despite Middle East challenges, we continue to see that their order inflow continue to remain very robust.” That comment is significant because it suggests overseas uncertainty has not materially dented the company’s pipeline, reinforcing confidence in revenue visibility over the coming quarters.

Power plays offer selective value

In the power and ancillary segment, SBI Securities is constructive on Siemens Energy, which has lagged recently. The brokerage’s view is that the underperformance may have overshot fundamentals, especially since quarterly numbers were “pretty much in line with expectation.”

That positions Siemens Energy as a catch-up candidate if sentiment improves around power equipment and grid-linked capital expenditure. In a market chasing momentum, such laggards with stable operating trends can quickly return to favour.

Cummins margin recovery in focus

Cummins India rounds out the preferred list, though the thesis here is more margin-led than order-led. The company delivered roughly 18% topline growth in the quarter, but profitability came under pressure as margins softened.

Still, SBI Securities believes the weakness could prove temporary. Agarwal said the company has “initiated price action” and expects margins to recover going forward, while pegging a target range of Rs 6,000-6,500. In a quarter where broader India Inc posted one of its strongest earnings performances in recent periods, that recovery argument could keep capital goods firmly on investors’ radar.