Buy BEL, HAL, Cummins, L&T for 17-24% upside; stay neutral on Siemens, says Citi

Foreign brokerage Citi has initiated coverage on six major Indian industrials, highlighting that the country’s capex cycle is transitioning from acceleration to consolidation. The brokerage noted that the cycle remains anchored by robust government investments, which continue at elevated levels, while corporate balance sheets are healthier, setting the stage for a broader private capex recovery over the medium term.
Cummins India and Bharat Electronics Ltd (BEL) are its preferred picks. It also has 'Buy' rating on Larsen & Toubro (L&T), Hindustan Aeronautics Ltd (HAL), 'Neutral' rating on Siemens Ltd and 'Sell' on ABB India. The brokerage suggested target prices that hinted at 17-24 per cent potential upsides for its 'Buy' picks. The target of Siemens suggests 7 per cent potential upside; ABB India's target hinted at 7 per cent potential downside.

Citi cautioned that near-term private capex will likely stay selective, confined to sectors aligned with policy priorities and emerging demand trends such as defence, datacentres, renewables, and semiconductors.

The brokerage remained optimistic about India’s infrastructure and industrial buildout, calling it a multi-decade opportunity. While government-led core infrastructure spending has slowed after rapid growth in FY22–24, Citi believes it remains the key driver of the ongoing cycle. Defence modernization and PSU-led investments are seen as enduring themes.

On corporate capex, Citi observed that momentum has moderated post-FY24, with divergence across sectors — utilities and new-age industries continue to attract fresh private investments. Broader recovery, it said, hinges on higher capacity utilization, easing global uncertainties, and sustained domestic demand.

Despite high valuations, Citi believes relative returns in the Indian capital goods space will now be stock-specific, led by companies demonstrating execution strength, growth visibility, and margin resilience. Defence, data centres, energy transition, and export-linked themes remain key opportunity areas.

Among its stock preferences, Citi’s top picks are Cummins India and Bharat Electronics (BEL). It has Buy ratings on L&T and Hindustan Aeronautics (HAL), is Neutral on Siemens, and has a Sell call on ABB India.

Key risks, according to Citi, include weaker-than-expected government capex due to fiscal constraints, raw material price volatility, and supply-chain disruptions. Upside triggers could come from a stronger export pickup and renewed government focus on infrastructure execution.