Nuvama's top industrial picks: BHEL, GV T&D, Hitachi, TARIL, CG Power & Apar Industries

Nuvama Institutional Equities has maintained a positive outlook on India's infrastructure and industrial spending cycle, pointing to specific sectors and companies likely to benefit from this long-term growth trend. The brokerage is especially optimistic about power, renewable energy (RE), transmission & distribution (T&D), railways and defence. In the short term, it also expects stronger activity in thermal power, T&D and defence.

According to Nuvama, public capital expenditure was subdued for most of FY25 due to election-related slowdown, but began recovering in the final quarter (Q4 FY25). It expects this uptrend to continue into the first half of FY26, led by increased allocations and project activity across key infrastructure segments.

On private capex, the brokerage points to traction primarily in new-age sectors such as data centres, solar modules, battery and chip manufacturing, water treatment and electronics. While broader private capex remains limited, capacity utilisation across industry has crossed 75 per cent  -- a threshold historically associated with fresh investment cycles. This lends cautious optimism to prospects of a broader capex recovery in the coming quarters.

Looking ahead to Q1 FY26, Nuvama sees continued strength in order inflows from infrastructure-linked sectors, particularly in data centres, water and wastewater treatment, railways, T&D and defence. 

It highlighted that product-based companies -- excluding EPC firms -- have been posting record-high margins in recent quarters. This trend is likely to continue, supported by better operating efficiency, stronger pricing power and the growing scale of high-voltage (HV) and HVDC projects. Additionally, export opportunities are emerging as another potential driver of growth.

The broking firm believes that the industrial pack's high valuations are justified, given the strong visibility on earnings, healthy return on equity (RoE) and record-high order books. With large project announcements picking up pace after the elections, it expects execution activity to accelerate in the coming quarters.

Nuvama's top stock picks in the sector are GE Vernova T&D India Ltd, Bharat Heavy Electricals Ltd (BHEL), Hitachi Energy India Ltd, Transformers and Rectifiers (India) Ltd (TARIL), CG Power and Industrial Solutions Ltd and APAR Industries Ltd. The brokerage believes these companies are well-placed to benefit from the next phase of the capex cycle.