The capital goods sector is in focus. The BSE Capital Goods Index is up nearly 4% in 5 days and has gained 21% in 6 months. If you are keen to know about which stocks to bet on, the domestic brokerage firm Motilal Oswal has identified some of the key opportunities in the capital goods sector. According to the brokerage report, players like Kalpataru Projects International (KPI) and KEC International (KEC) stand out for their order books, high-margin segments, and steady revenue visibility, making them key names to watch
Motilal Oswal’s top pick in the capital goods sector: Kalpataru Projects International
Kalpataru Projects International (KPI) emerges as Motilal Oswal’s top pick in the sector.
As per the brokerage report, “KPI has benefited from strong traction in its transmission segment and has received order inflows worth Rs 102 billion/Rs 112 billion/ Rs 145 billon in FY23/FY24/FY25, constituting 40%/37%/57% of total order inflows.”
With a growing share of T&D revenue and high-margin segments in B&F and oil & gas, KPI is well-positioned to capture opportunities from expanding metro systems, elevated corridors, and large oil projects in the Middle East. The brokerage expects a CAGR of 13%/17% in order inflows and revenue over FY25-28, and reiterates its ‘Buy’ rating with a SoTP-based target price of Rs 1,450.
For KEC, the brokerage house added that “KEC is currently trading at 25.3x/20.0x/16.5x on FY26E/FY27E/FY28E EPS. We reiterate Neutral rating with a target price of Rs 950, based on 21x Sep’27E EPS.”
Motilal Oswal on Capital Goods: KEC International seeing steady growth
KEC’s T&D segment remains the main growth engine. As per the report, “KEC’s T&D segment inflows stood at Rs 90 billion/Rs 101 billion/Rs 156 billion in FY23/FY24/FY25, constituting 40%/56%/63% of total order inflows.”
The brokerage house highlighted that the company is focusing on domestic and international opportunities while cautiously bidding for lower-margin segments like railways and water.
Motilal Oswal on Capital Goods: Transmission order pipeline is building up
Motilal Oswal highlighted that, the total addressable market for T&D projects over the next 1–1.5 years is estimated at IRs 1–1.5 trillion.
The brokerage house noted in its report, “During FY25, 45 ISTS-TBCB schemes were awarded, including two HVDC schemes. Going ahead for FY26, apart from transmission projects, few HVDC projects, such as KPS III HVDC Transmission (Khavda-South Olepad HVDC) and the Leh-Ladakh HVDC project, are likely to be finalised.”
Motilal Oswal on Capital Goods: Margins supported by commodity stability
Raw material prices have eased recently, with aluminum, zinc, and rebar down 2–11% versus March 2025 levels.
The brokerage report added, “A sustained decline in commodity prices is likely to improve margins for transmission EPC players in the future.”