Infra companies cash in on recovery, order books soar

20-Aug-2022: Addressing group company UltraTech Cement shareholders earlier this week, Aditya Birla Group chairman Kumar Managalam Birla said the company’s recently announced Rs 12,886-crore capex plans were backed by a strong conviction on India’s growth potential.

India’s leading infrastructure and capital goods firms would share Birla’s optimism, going by their soaring order book positions. For instance, ABB India won fresh orders worth Rs 2,767 crore in the June quarter, a 64% increase over the same period a year ago. As of June 30, 2022, the engineering services company’s cumulative order book stood at Rs 5,995 crore.

“This was one of our strong quarters. We have 20 business units, and each and every business posted good traction. It is the same for orders, it’s the same for revenues and the story of cash and profits also follow the same direction. None of these order backlogs are slow moving or non-moving, and they will get converted into revenues over a period of time,” ABB India chief financial officer TK Sridhar said in an earnings call.

Ditto was the case for Siemens. In the June quarter, the company’s order backlog from continuing operations stood at an all-time high of Rs 17,856 crore. For the firm, new orders from continuing operations were at Rs 4,992 crore, a 20% rise over the same period a year ago.

The strong performance was across all our businesses and included a significant order in our mobility business. While we are currently not experiencing a slowing down in public and private capex spending, we are concerned about global headwinds impacting demand which could result in a slowdown in capex spending,” Siemens managing director and chief executive officer Sunil Mathur said.

Similar was the case for pump manufacturer Kirloskar Brothers. The Pune-based firm’s order intake during the first quarter rose 25% to Rs 941 crore at a consolidated level, compared with Rs 753 crore recorded a year ago.

“Over the past few quarters, the company has witnessed a consistent upward trajectory in the inquiries as well as order inflow. The similar traction was continued in Q1FY23 and the consolidated order book stood at Rs 2,611 crore, which does not include orders made to stock products such as retail and agri pumps. The company expects this traction to continue for the upcoming quarters as well, driven by visible recovery in domestic capex and in some key international geographies,” Kirloskar Brothers chairman and managing director Sanjay Kirloskar said.

Companies such as Larsen & Toubro’s order book on a group basis was Rs 3.63 trillion as of June 30, the highest-ever for the engineering and construction major company, while engineering, procurement and construction major KEC International’s order book position (including lowest bidder status) stood at Rs 30,000 crore. Pune-based engineering conglomerate Thermax’s order booking for the quarter rose 36% to Rs 2,310 crore.

EPC company Kalpataru Power Transmission also recorded a 13% rise in consolidated order book to Rs 36,880 crore on a quarter-on-quarter basis. In FY22, order booking of Tata Projects stood at Rs 14,800 crore (Rs 8,860 crore in the previous year), resulting in a total order backlog of Rs 44,997 crore.

Bharat Heavy Electricals’ order flows were healthy, with the state-run winning orders worth Rs 2,508 crore in the June quarter. Its total outstanding order book as of June 30 was at Rs 99,967 crore.

“From a demand perspective, demand is strong. In most market segments, the demand remains strong. Order books are pretty good. This is from a domestic perspective,” Cummins India managing director Ashwath Ram was quoted in the earnings release.