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List of India Machinery/Capital Goods/Engineering Manufacturers/Stocks – Set to Capitalize on Infra Growth

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India’s Economy is being hampered in its growth trajectory by lack of infrastructure which is leading to supply side problems.India  suffers woefully from a lack of roads,electricity,ports etc. and almost a trillion dollars is going to be spent in the next few years as demand outstrips supply.India’s Machinery and Capital Goods Industry is set to capitalize on this strong growth and is already seeing massive orders which are 2-3 years worth of their annual revenue.While the stock valuations of the capital goods equipment manufacturers has come down a bit from the heavy days of 2008,they are still quite high reflecting the strong growth potential.India’s Engineering Industry is also composed of a number of smaller manufacturers that export light engineering equipment worth several billion dollars mostly to developing countries.India’s Machinery Sector is composed of a mix of government owned and private companies as well as the giant capital goods MCN conglomerates like Areva and others.Here is a list of the major Indian equipment manufacturers.

India’s State Owned Companies

BHEL- with a market cap of around Rs. 94,000 core,  is the largest engineering & manufacturing enterprise in India.The state owned giant is a capital goods colossus and has the biggest marketshare in the electricity producing equipment industry.The company has also been ramping up its international operations. It earned a revenue of Rs. 90,000 crore with a net profit margin of 15% (Dec ’10). BHEL’s operations are organised around three business sectors, namelyPower, Industry Including Transmission, Transportation and Renewable Energy – and Overseas Business.

Bharat Electronics Ltd( BEL) – This is another state owned companyestablished by the Indian Government to meet the specialised electronic needs of the Indian defence services. $3 billions is  the market capitalization of this company which has shown impressive stock price appreciation.One of the best ways to play the Indian Defence Sector.. The company also produces consumer products like  Electronic Voting Machines, Solar Powered LED-Based Traffic Signal Lights, Simputers and Set Top Boxes.BEL offers contract-manufacturing services for both domestic and international customers. The revenue earned in Dec ’10 was Rs.1,400 crores & Net profit margin was 12%.

BEML – The company was also known formerly Bharat Earth Movers Limited was established as a Public Sector Undertaking for manufacture of Rail Coaches & Spare Parts and Mining Equipment. The Company has a market capitalisation of  $500 million  & earned revenues of Rs. 3,500 crores (2009-10) with a net profit margin around 8% (Dec’10). Its three major Business verticals viz., Mining & Construction, Defence and Rail & Metro.

Foreign Companies

Siemens – German Conglomerate Siemens with annual 20 Billion Euros in revenues is fast expanding in the Indian market.The company is looking to delist from the Indian market which has a $6 billion listed subsidiary.Siemens is like ABB,Alstom not only a leader in electrical equipment but also in Lighting (OSRAM),Green Building Solutions,Energy Transmission and Distribution

ABB – ABB, the European Giant which was formed by merger of Asea and Brown Boveri in 1989 .The company which generated over $30 billion in revenues in 2009 with a roughly 10% Net Profit Margin is a leader in Power Systems,Network Management,Electricity Transmission and Distribution.Like Siemens,ABB is looking to delist its Indian arm from the Stock Market.All MNCs are looking to ramp up their Indian operations to take part in the growth as developed world faces low to no growth due to the GFC.Infrastructure is a particularly lucrative sector with an estimated  $500 Billion required over the next 5-10 years.

Areva – This French owned Nuclear Giant has a market cap of around $1.2 billion in India and earned a revenue of Rs.1,300 crores with a  net profit margin was 6% in Dec ’10. The company operates mainly in the  transmission and distribution solutions to improve network stability and make electricity available everywhere. The major products are Substation equipment, such as high and medium voltage transformers, circuit breakers, disconnectors and instrument transformers.Network management, protection and control solutions.It also provides Network consulting and Asset Management

Alstom Projects – Another Foreign Subsidiary ,Alstom in India has operates  in engineering, manufacturing, project management and supply of power generation equipment with a market capitalisation of $800 million It also has a significant presence in the transport sector in India providing railway equipment and technology solutions.  The revenue generated was Rs. 350 crores & the net profit margin was around 4% in Dec’10.Alstom’s major industrial presence in India has become a platform for exports, producing equipments and systems for large projects for the power sector.

General Electric has also a major presence in the Indian markets alongwith others though it is not listed on the Indian markets

Indian Private Companies

Larsen & Toubro – L&T which is one of the largest companies in India with diverse interest across sectors like construction,real estate,technology,capital goods equipment etc. is one of the highest quality companies as well.The company has made a plan to spin off its divisions into separate listed companies as its size has become too unwieldy.One of the best quality construction companies in the country,it possesses skills which other companies don’t.The company also has high corporate governance standards and is professionally managed.L&T is the second biggest engineering company in India with a total value of $20 billion.

Suzlon Energy –  Suzlon,the Indian Wind Turbine making company has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.With the 2 biggest markets of USA and China dominated by domestic players,Suzlon has become a shadow of its former self.The company continues to operate at a below breakeven level despite order book improving slowly.RePower is a bright spot with a good order book and gaining strong traction for its larger turbines.It has a marketcap of ~$2 billion which gives it an enterprise value of ~$2.75 billion.

Crompton Greaves – is fast growing private company present in electrical, industrial and consumer products and solutions .  The revenue as on Dec ’10 was Rs. 1,400 crores & Net profit margin was 13%. With a market cap of $3.5 billion, the company has a  diverse portfolio of products, from high-end power and industrial equipments and solutions, to consumer products and home appliances.CG is present in  three business segments, viz. Power Systems, Industrial Systems and Consumer Products.

Thermax Ltd. – Another major private company like Crompton and Greaves,Thermax provides a range of engineering solutions to the energy and environment sectors. The company has a market cap of around $1.5 billion and produces  a range of boilers and thermal oil heaters, energy chillers and exhaust gas boilers. Thermax is also a major manufacturer of energy efficient and environment equipment such as biomass boilersT.hermax has formed technology partnerships with global majors, like Babcock & Wilcox (USA), Kawasaki Thermal Engineering (Japan), Balcke Durr (Germany), Eco-Tech (Canada) and Georgia Pacific (USA).The company earned revenue of Rs. 1,200 crore with a net profit margin of 8% (Dec ’10).

Lakshmi Machine Works Ltd. – LMW has a market cap of $500 million and a  major manufacturers of the  of Textile Machinery. LMW has 60% market share in the domestic Textile Spinning Machinery Industry. It earned a revenue of Rs.490 crores with a net profit margin of 9% (Dec’10).LMW’s Global presence has grown over the years, with a market presence not only in developing countries, but also in Europe. The only company in Asia outside Europe to manufacture OE products for Mikron of Switzerland.

Havells India – This company is one of the largest electrical and power distribution equipment manufacturer with products covering the entire gamut of household, commercial and industrial electrical needs. It has a market cap of $900 million. Havells owns  global brands like Crabtree, Sylvania, Concord, Luminance, Linolite, & SLI Lighting. The company generated revenues of Rs. 700 crores with a net profit margin of 8% (Dec’10).

Other major private companies are Usha Martin,Praj Industries,Punj Lloyd,BGR Energy etc.

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Abhishek Shah

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