Revenues Of Engineering, Capital Goods Companies Seen Up 15-17%: Report

While working capital requirements will increase, higher cash generation and prudent capital expenditure (capex) will keep credit profiles stable, shows a Crisil Ratings analysis

The government's thrust on infrastructure with higher budgetary allocation and economic recovery will lift the revenues of engineering and capital goods companies by 15 to 17 per cent this fiscal, more than making up for a 3 per cent contraction last fiscal. Besides, better coverage of fixed costs will lead to a 50 basis points (bps) improvement in the operating margins, according to Crisil Ratings. Increases in raw material prices are being passed on with a lag. While working capital requirements will increase, higher cash generation and prudent capital expenditure (capex) will keep credit profiles stable, shows a Crisil Ratings analysis of 42 companies with aggregate revenue of Rs 1.30 lakh crore and accounting for about 55 per cent of the sector's revenue. Anuj Sethi, Senior Director at Crisil Ratings, said the order book of engineering and capital goods companies remains healthy at Rs 2.3 lakh crore (1.7 times of fiscal 2021 revenue).