Shares of GE Vernova T&D India, Hitachi Energy India, Siemens Energy India, and other capital goods companies came under sharp selling pressure in Friday’s trade, falling as much as 10.5%, after investor sentiment was hit by the Centre’s decision to allow four Chinese-linked power equipment manufacturers to participate in government tenders for critical domestic power projects.
India has allowed four Chinese power equipment manufacturers with factories in the country to participate in government tenders for critical power projects, Reuters reported, citing a government order.
The companies—TBEA Energy, Nanjing Electric India, New Northeast Electric India, and Taikai Electric (India)—will be eligible to participate in government tenders, according to a June 24 order issued by the Ministry of Finance and reviewed by Reuters.
India’s Ministry of Power had sought the exemption in January for companies with manufacturing facilities in India involved in critical power projects. Reuters had also reported earlier this year that the government was examining broader relaxations for Chinese bidders as border tensions between the two countries eased.
Following the 2020 border clash, India had mandated that Chinese companies register with a government panel and obtain political as well as security clearances before participating in any government contract.
The exemption comes as India accelerates the expansion of its transmission infrastructure to meet rising electricity demand and support the rapid addition of renewable energy capacity. The order stated that the exemption will remain valid for two years from the date of issuance and should not be treated as a precedent for other companies.
Power equipment stocks lead the sell-off
GE Vernova T&D India led the decline, plunging 10.4% to a more than one-month low of ₹4,320 per share. It was followed by Hitachi Energy India and Siemens Energy India, which fell as much as 9% and 8%, respectively, during the session.
CG Power and Industrial Solutions remained under pressure for the second consecutive session, declining another 7.5% to ₹887 apiece. Thermax also dropped 7% to ₹4,600, extending its losing streak to a third straight day.
Other capital goods stocks, including Apar Industries, Bharat Heavy Electricals (BHEL), Kirloskar Oil Engines, Data Patterns, Elgi Equipments, Timken India, and Cummins India, also fell more than 2% in intraday trade.
Motilal Oswal remains constructive on sector despite near-term challenges
According to domestic brokerage Motilal Oswal, order inflows during the second quarter remained weak due to disruptions caused by the West Asia crisis, although it expects ordering activity to improve in the coming quarters.
The brokerage noted that the broader capital goods sector continues to face pressure from elevated freight and commodity costs. However, power transmission & distribution (T&D), renewable energy, and defence remain the key growth drivers, while demand related to data centre infrastructure is also gathering momentum.
It further added that the medium-term ordering outlook remains supported by a gradual recovery in private capital expenditure and export opportunities, although the pace of government capex will depend on the trajectory of crude oil prices.
While the overall outlook for the sector remains positive, the brokerage recommends a selective investment approach, favouring companies with strong execution capabilities, healthy balance sheets, and robust order book visibility.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
