Top Industrial Stocks to Watch for Strong Q4 Performance

7 Industrial Stocks Poised for Strong Performance in Q4 FY25

Market Overview

Despite the completion of recent elections, government capital expenditure and project awards remain slow. The National Highways Authority of India (NHAI) continues to postpone bids, despite a strong project pipeline. Significant BOT projects in Assam and Madhya Pradesh have faced submission delays, while water projects under JJM have also stalled. This has impacted the revenue growth of EPC players in Q3 FY25.

Renewable Energy and Capital Goods Sectors

The renewable power sector is emerging as a key long-term investment theme, along with defense and power security. High-voltage direct current (HVDC) projects worth ₹1.2 trillion are expected over the next two years, with a split between EPC (45%) and equipment players (55%). Underinvestment in T&D equipment capacity has created strong pricing power for incumbents, with robust local and export demand.

Financial Performance

The EPC/infrastructure sector is expected to show moderate growth, with a 1.5% YoY increase in revenue to ₹198.2 billion, and declines in EBITDA and PAT. In contrast, the capital goods sector is projected to see stronger performance with 18% YoY revenue growth to ₹915.7 billion. The second half of FY25 is expected to see improved execution, supported by asset monetization and robust balance sheets.

Stocks Expected to Perform Well in Q4 FY25

Here are the stocks that HDFC Securities expects to perform well in Q4 FY25:

Capital Goods Stocks

1. Larsen & Toubro (L&T): A leading Indian multinational with expertise in construction, engineering, IT, power, defense, and financial services. The stock is up 1.79% for the day, has decreased by 6.21% over the past month, and has not changed over the last year, but has returned 173.8% over the last five years.
2. Cummins India: A subsidiary of Cummins Inc., manufacturing diesel and natural gas engines for industries like mining, construction, and agriculture. The stock is up 0.28% for the day, has decreased by 17.24% over the past month, and has risen by 45.9% over the last year, with a 406% increase over the last five years.
3. Kalpataru Power Transmission (KPTL): Specializes in power transmission and distribution projects, expanding into infrastructure and real estate. The stock is down 1.70% for the day, has decreased by 11.68% over the past month, and has risen by 60.62% over the last year, with a 121% increase over the last five years.
4. Steel Authority of India Limited (SAIL): A leading government-owned steel manufacturer in India. The stock is up 0.94% for the day, has decreased by 10.39% over the past month, and has fallen by 4.04% over the last year, with a 113% increase over the last five years.

Infrastructure Stocks

1. HG Infra Engineering: Known for its civil engineering expertise, particularly in highways and bridges. The stock is up 0.46% for the day, has decreased by 7.7% over the past month, and has risen by 53.2% over the last year, with a 391% increase over the last five years.
2. PNC Infratech: Focuses on road and highway construction. The stock is up 1.57% for the day, has decreased by 5.56% over the past month, and has fallen by 25.17% over the last year, but has increased by 56.86% over the last five years.
3. NCC Limited: A key player in India’s construction industry, engaged in civil engineering and infrastructure projects. The stock is up 1.86% for the day, has decreased by 19.37% over the past month, and has risen by 30.73% over the last year, with a 322.8% increase over the last five years.

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