Capital Goods Sector Report - US India Trade Deal Beneficiaries - Trade Math Turns Decisively Positive for India

The sharp reduction of US tariffs on Indian goods from ~50% to 18% is a decisive structural positive for Indian capital-goods equities. It materially enhances export competitiveness versus peers, given that other key exporters still face significantly higher USA duties—China at about 34%, Vietnam ~46%, Bangladesh ~37%, South Korea ~25–26%, and Indonesia ~32% under the prevailing US reciprocal tariff regime prior to this change. This tariff realignment should help Indian capital-goods exporters narrow landed-cost disadvantages, reclaim market share, support margin expansion, and improve earnings visibility, warranting a constructive outlook for the sector. From our coverage, it’s a strong positive for The Anup Engineering, TD Power Systems, Inox India, and Triveni Turbine.

The Anup Engineering (Exports constituted 62% of sales in FY25):

Despite nil current exposure to the USA in its order book, The Anup Engineering is well positioned to re-enter a strong growth trajectory as the US tariffs ease. With historical US revenue contribution of over 25% till FY25, export economics, margin visibility and bid competitiveness will materially improve. The company manufactures critical heat exchangers, pressure vessels and process equipment, supplying global EPCs and marquee clients across oil & gas, chemicals, fertilizers and power. Supported by a strong capex cycle and execution capabilities, the outlook for growth recovery appears compelling. At 21.3x FY28e EPS, we believe the company is a value buy with good downside protection.

TD Power Systems (63%):

Direct exposure to USA is 5-10% but can increase sharply aided by the tariff resolution. The company continues to benefit from a pronounced demand–supply imbalance in industrial generators, underpinning strong earnings visibility. A multi-year global upcycle in gas turbines and generators—driven by data centers, grid expansion and industrial demand—remains intact. TDPS’s leadership in alternators, record OEM backlogs and their capacity constraints position it for sustained order inflows, higher utilization, possible margin expansion and strong Q4 growth, aided by the Tumkur facility capacity expansion. Trading at 32.3x FY28e EPS, we believe the premium valuation is justified considering strong tailwinds from a clear structural demand and the latest USA-India trade is an icing on the cake.

Inox India (53%):

With ~15% exposure to the USA based on sales, the reduction in tariffs is a clear incremental positive for Inox India, enhancing export competitiveness with limited downside risk. This adds to an already robust thesis anchored in a diversified end-user base, resilient industrial gas demand, and growing LNG and cryo-scientific presence. Modest US exposure, reasonable valuations (26.1x FY28e EPS) and policy optionality reinforce Inox India’s defensive yet upside-skewed profile.

Triveni Turbine (48%):

Exposure to the USA is currently very modest — its wholly-owned subsidiary in Texas (Triveni Turbines Americas Inc.) is in early stages and contributed less than 1% of revenue in FY25, with limited order conversion partly due to tariff uncertainty. While majority of its exports are to Europe, Middle East and other regions, the company has seen a sharp decline of ~30% YoY in its exports order intakes in H1-FY26. We believe the tariff resolution will increase the competitiveness of the company versus its peers in the global market leading to a recovery in order intakes going forward. Trading at 31.1x FY28e EPS, we remain sanguine of a strong recovery in operational performance in the near-term.

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Analyst:

• Mohit Surana - Senior Research Analyst, Institutional Equities (NISM-202300189881)
• Mohd Haris - Research Associate, Institutional Equities (NISM-202400161268)

Frequently Asked Questions (FAQ)

These FAQs highlight key implications of the US–India tariff realignment for Indian capital goods companies, focusing on export competitiveness, earnings outlook and major beneficiaries.

1. What is the key impact of the US–India trade tariff reduction?

The reduction of US tariffs on Indian goods to ~18% significantly improves India’s cost competitiveness versus major exporting nations, supporting higher export opportunities and better margins.

2. Which companies are expected to benefit the most?

Key beneficiaries include The Anup Engineering, TD Power Systems, Inox India and Triveni Turbine due to their strong export orientation and global customer base.

3. How will this affect sector profitability?

Lower tariffs reduce landed costs, improving bid competitiveness, supporting market share gains and enabling potential margin expansion over the medium term.

4. Why is the outlook structurally positive for capital goods exports?

Along with tariff advantages, a global capex upcycle, demand from energy transition, data centers and industrial expansion support long-term growth visibility.

5. What risks should investors track?

Global economic slowdown, delays in export order conversion and geopolitical or trade policy changes remain key risks for the sector.

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