New Delhi [India], April 17 (ANI): The engineering, procurement, and construction (EPC) and capital goods sectors are expected to report mixed performance in the January-March quarter (Q4FY25), according to a report by HDFC Securities.
For the EPC and infrastructure segment, the report stated that the revenue, operating profit (EBITDA), and net profit (PAT) are likely to decline slightly year-on-year.
Revenue is expected to fall by 0.9 per cent to Rs 23,080 crore, EBITDA by 7.5 per cent to Rs 3,010 crore, and PAT by 9.8 per cent to Rs 1,230 crore. The EBITDA margin–a measure of profitability–is likely to come down to 13 per cent, which is 0.93 percentage points lower than the same quarter last year.
The report said “We expect EPC/infra universe revenue/EBITDA/PAT to grow/decline -0.9/-7.5/-9.8% YoY to INR 230.8/30.1/12.3bn, with EBITDA margin at 13.0% (-92.8bps YoY)”.
In comparison, the report highlighted that the capital goods sector is expected to perform better. Revenue is likely to rise 13.9 per cent year-on-year to Rs 1,06,530 crore, EBITDA by 13 per cent to Rs 11,730 crore, and PAT by 4.1 per cent to Rs 7,110 crore.
However, the EBITDA margin is expected to remain flat at 11 per cent, with only a minor dip of 0.09 percentage points.
As execution is expected to improve in the coming quarters, the report stated, there is potential for a positive re-rating of EPC stocks. Capital goods stocks, however, are trading at higher valuations of 49.7, 38.6, and 31.2 times for FY25, FY26, and FY27.
The report said “In capital goods, revenue/EBITDA/PAT are expected to grow/decline by 13.9/13/4.1% YoY to INR 1065.3/117.3/71.1bn, with EBITDA margin at 11.0% (-8.7bps YoY)”.
On the ground, government capital expenditure in Q4FY25 remained below expectations, especially outside the power transmission and distribution (T&D) segment.
The report also stated that the road sector players have said that although there are many projects in the pipeline, actual awarding of contracts is getting delayed. Water projects under the Jal Jeevan Mission (JJM) have also seen little progress, with many previously awarded projects facing delays due to poor payments and collection issues.
While there was some improvement in collections during Q4FY25, it was not enough to speed up work in the water segment. (ANI)
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