Q4FY26 Capital Goods Sector Report - Capex Recovery Faces Near-Term Hurdles

India Inc’s capex momentum slowed sharply toward the end of FY26, with March seeing a steep drop in project announcements, reversing earlier recovery. Q4 witnessed a significant decline, reflecting cautious corporate sentiment amid global uncertainties. Geopolitical tensions in West Asia, high input costs, and weak export demand led to delays in investment decisions. While sectors like energy transition and infrastructure remain active, private capex is still selective. Despite near-term weakness, the medium-term outlook remains positive, supported by government spending, strong corporate balance sheets, and structural demand drivers. From our coverage, our top picks are TD Power, KSB, and Triveni Turbine.

TD Power Systems:

We estimate Q4 and FY26E YoY revenue growth of 50%/40% and PAT growth of 35%/36%, respectively, with EBITDA margin at 18.3%/18.3% and PAT margin at 13.6%/13.3%, respectively. Strong performance expected due to sustained data center driven demand. The order backlog of Rs 18.5 bn, as of Q3FY26, is expected to strengthen further given strong order inflows trend. Additionally, the new Tumkur facility provides incremental capacity to support elevated demand levels.

Triveni Turbine:

We expect Q4 and FY26E YoY revenue growth of 16%/6% and PAT growth of 15.5%/flat, respectively, with EBITDA margin estimate at 20.8%/21.3% and PAT margin at 17.5%/16.8%, respectively. Our estimates factor in likely delays in shipping and a consequent delay in recognition revenue due to the ongoing ME unrest. The company’s strong aftermarket franchise, leadership in the sub-30 MW steam turbine segment, and entry into adjacent industrial heat solutions should support demand and underpin recovery beyond the near term. The company expects strong recovery in FY28.

Inox India:

We expect Inox India to deliver Q4 and FY26E YoY revenue growth of 16%/19% and PAT growth of 18%/15%, respectively, with EBITDA margin at 21.1%/22.0%. While order inflows should also show modest YoY growth, we expect backlog to improve materially in FY27 as tenders for ISRO and Andaman LNG project are yet to open; Q3FY26 backlog at Rs 14.6 bn.

KSB:

CYQ1 is usually a seasonally weak quarter for KSB, with 10% YoY revenue growth and 8.0% YoY PAT growth expected in Q1CY26E, while EBITDA margin could come in lower at 11.0% versus 11.4% in Q1CY25, accounting for the LPG shortages led impact. With an order backlog of ~Rs 26 bn, around half attributable to orders from NPCIL, execution momentum is expected to strengthen from Q2CY26 once NPCIL approvals
are secured, expected by May’26.

ESAB India:

We estimate Q4 and FY26E YoY revenue growth of 10.2%/10.5% and PAT growth of 19%/18%, respectively, with EBITDA margin at 20.0%/19.0% and PAT margin at 14.0%/14.5%, respectively. We continue to remain positive on India’s growth story, which along with GoI’s emphasis on growing its shipbuilding industry bodes well for demand for welding equipment and consumables, positioning ESAB as one of the key
beneficiaries in the medium term.

The Anup Engineering:

Q4 and FY26E YoY revenue growth expected at 11%/17.5% and PAT growth of 6%/flat, respectively, with EBITDA margin at 22.4%/22.2% and PAT margin at 13.6%/13.6%, respectively. The order book stood at Rs 5.5 bn in Q3FY26, implied book-to-bill of 0.7x. While near-term challenges
persist due to ongoing ME unrest, the management remains optimistic of better order intakes once ME unrest is resolved.

JNK India:

We expect a 15% YoY growth in revenue driven by continued execution of new orders under the input-based revenue recognition framework. With legacy projects now forming a negligible share of revenues, EBITDA margins are expected to improve sequentially to ~14%, supported by better mix and operating leverage, reaching steady-state levels.

KPCL:

We expect a strong recovery in Q4FY26, with revenues up ~20% YoY, led by improved execution and clearance of deferred orders from H1. Higher dispatches across air and refrigeration, supported by scaling of Tezcatlipoca, initial ramp-up of Tyche, and greater use of in-house Khione compressors, should drive the rebound, while process gas remains weak. EBITDA margin is expected to improve to ~20.5%, aided by
operating leverage and a better product mix.

Click to download the full Capital Goods Sector Report 4QFY26 Company Update

Analyst:

• Mohit Surana - Senior Research Analyst, Institutional Equities (NISM-202300189881)
• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

Open your MNCL Demat Account

FAQs on Capital Goods Sector Report 4QFY26

Why has capex slowed in Q4FY26?

Global uncertainties, geopolitical tensions, and high input costs have delayed investment decisions, leading to slower capex activity.

Which sectors are still driving demand?

Energy transition, infrastructure, and data center-related investments continue to drive demand within the capital goods sector.

Which companies are preferred picks?

TD Power Systems, KSB, and Triveni Turbine are preferred due to strong order books, execution capabilities, and growth visibility.

What is the outlook for the sector?

While near-term growth may remain subdued, strong balance sheets and government spending support a positive medium-term outlook.

Before You Trade, Strengthen Your Foundations with These Guides

• For a stronger understanding of indicators such as RSI, VWAP, and trendlines, check our 👉 Technical Analysis Fundamentals section.
• Want to refine your risk-reward planning? Explore our insights on 👉 Position Sizing & Risk Management Strategies.