What is the story about?
Shares of capital goods stocks, BHEL, ABB India Ltd., CG Power Ltd., and others fell between 3% to 6% on Monday, January 12, extending their losses from last week on concerns over reports of allowing Chinese companies to bid for government contracts.
No official notification from the government has been issued in this regard so far.
In an interaction with CNBC-TV18 on Monday, Renu Baid Pugalia of IIFL said that in their interaction with industry experts is indicating that the within the transmission, space power transmission, high voltage reactor category, one of the Chinese manufacturers, TBEA, has been approved to participate in bids for reactors, starting financial year 2027.
"It's not that the restrictions are lifted. So there is no risk of imports here at the moment. But yes, in the transmission space, where players were constrained on capacities and the average pricing in the market have shot very sharply. There we are see. We are hearing Chinese players, or they are factories which are based out in India are now being allowed to participate in future bids," she said.
Within the high voltage and extra high voltage space, stocks like Hitachi Energy, GE Vernova T&D, CG Power, Transformers and Rectifiers are some active names.
IIFL's Renu Baid Pugalia expects valuations to correct for these capital goods companies to factor in the increased competition and the risk that the market appears to be discounting.
"Whether TBEA was allowed or not, market prices were expected to correct, they just that the entry or the announcement of Chinese owned manufacturers being re allowed in the market will have a sentiment overhang on the companies we don't perceive or foresee any material impact on earnings or sudden crackdown on the market pricing, because capacities are constrained," she added.
Shares of BHEL are now trading 3.8% lower on Monday at ₹264, while those of Hitachi Energy India are down 2.9% at ₹17,363. CG Power shares are down 1.3% at ₹587, while ABB India shares are down 1.8% at ₹5,000.
No official notification from the government has been issued in this regard so far.
In an interaction with CNBC-TV18 on Monday, Renu Baid Pugalia of IIFL said that in their interaction with industry experts is indicating that the within the transmission, space power transmission, high voltage reactor category, one of the Chinese manufacturers, TBEA, has been approved to participate in bids for reactors, starting financial year 2027.
"It's not that the restrictions are lifted. So there is no risk of imports here at the moment. But yes, in the transmission space, where players were constrained on capacities and the average pricing in the market have shot very sharply. There we are see. We are hearing Chinese players, or they are factories which are based out in India are now being allowed to participate in future bids," she said.
Within the high voltage and extra high voltage space, stocks like Hitachi Energy, GE Vernova T&D, CG Power, Transformers and Rectifiers are some active names.
IIFL's Renu Baid Pugalia expects valuations to correct for these capital goods companies to factor in the increased competition and the risk that the market appears to be discounting.
"Whether TBEA was allowed or not, market prices were expected to correct, they just that the entry or the announcement of Chinese owned manufacturers being re allowed in the market will have a sentiment overhang on the companies we don't perceive or foresee any material impact on earnings or sudden crackdown on the market pricing, because capacities are constrained," she added.
Shares of BHEL are now trading 3.8% lower on Monday at ₹264, while those of Hitachi Energy India are down 2.9% at ₹17,363. CG Power shares are down 1.3% at ₹587, while ABB India shares are down 1.8% at ₹5,000.
