Best Capital Goods Stocks in India 2024

  • 10 May 2024
  • Read 10 mins read

Indian capital goods stocks are shares of companies engaged in activities like manufacturing and supplying machinery, equipment, and tools, which play a crucial role in the operation and expansion of various industries and sectors. Investing in Indian capital goods stocks in 2024 can be a good opportunity as they contribute to the country's economic growth. 

To invest in these companies, an investor needs to consider various factors. This blog will cover and address these factors by further covering some of the best capital goods stocks in India, understanding the features of capital goods share, advantages and more.

What are Capital Goods Stocks?

Capital goods stocks refer to the shares of organisations that manufacture and distribute equipment, tools and machinery. These stocks are linked to construction, technology, infrastructure, etc.

Capital goods are generally durable goods used in production and other goods or services. Companies that produce these goods or provide such services are called capital goods companies. 

Indian capital goods play an important role in the growth and development of the country’s economy. Investing in capital goods shares can provide you with exposure. However, it is important to research thoroughly before investing in this sector. This will help you to make wise investment decisions.

 

Top 10 Capital Goods Stocks List

The following is the breakdown of the capital goods stocks list, which includes data about market capitalisation and share price of the capital goods companies:

Capital Goods ComapniesShare Price (in INR)Market Capitalisation (in Billion INR)
Cummins India Ltd3,251.10901.2
Polycab India Ltd5,575.05837.64
Mazagon Dock Shipbuilders Ltd2,418486.5
CG Power and Industrial Solutions Ltd557.4852.11
Larsen & Toubro Ltd3,6084,950
Havells India Ltd1,643.101,030
APL Apollo Tubes Ltd1,553.95431.26
Astral Ltd2,043548.8
Bharat Heavy Electricals Ltd278.2970.8
ABB India Ltd6,4181,360

Disclaimer: This capital goods share list contains data updated as of 27th April 2024. However, it's important to conduct detailed research before making any investment decisions in these stocks.

Top Capital Goods Stocks: A Brief Overview

The above-mentioned stocks are some of the best capital goods stocks in India. Let’s learn more about their performance, future plans, market prices, and more

Capital Goods Sector in India

The capital goods stocks sector forms the backbone of major industries in India. Its products are used in everything from factories to construction sites to transportation. According to ticker tape, the capital goods and financial services sectors are expected to perform well in 2024.

Foreign Institutional Investors have been buying up these sectors heavily over the last year, amounting to over Rs. 1,00,000 crore in both industries combined. The government has already started long-term capital expenditures across main sectors, such as clean energy, railways, transmission, etc., until FY 2030. This provides a strong addressable market for capital goods companies.

The current emphasis on "Made in India" has increased the focus on manufacturing capabilities and raised awareness of the Indian capital goods industry. As of 2024, this sector contributes 12% of the total manufacturing output and around 17% to the country’s GDP. This increased optimism has been reflected in the stock price of the capital goods companies. 

Why Invest in Capital Goods Stocks?

Investing in capital goods stocks can be a wise decision because these companies are crucial in driving economic growth. For example, building a new highway requires construction elements, vehicles, and other relevant machinery, and capital goods companies supply these essentials. As the economy grows and development projects increase, the demand for capital goods ultimately rises, making this sector important in the country’s economic journey. 

As per the analysis of ticker tape, Companies like Hindustan Aeronautics, with an order book of over Rs 80,000, and Engineers India, whose orders have grown from Rs 1,500 crore to over Rs 4,500 crore in the past two years, show the strong demand for capital goods products. Investing in the best capital goods stocks can provide good exposure to investors and help them earn potential returns as the economy expands.

How to Invest in Capital Goods Stocks?

Investing in capital goods stocks can be a great option as it presents an opportunity for potential capital gains. The following are some effective ways to invest in capital goods stocks NSE:

  • Set Long-term Goals:

    When considering capital goods stocks, recognise their potential for long-term growth. These capital goods sector stocks often benefit from infrastructure expansion and industrial development. One should focus on companies with consistent growth history and positive earnings trends.
  • Understand Risks and Diversify Portfolio:

    While capital goods shares offer growth opportunities, they also come with exposure to market volatility and economic cycles. One should understand the risks associated with individual stocks and sectors. Furthermore, diversification helps spread one's investment across various capital goods stocks and other sectors to reduce the impact of a single industry downturn on one's overall portfolio.
  • Stay Updated about Market Trends:

    When investing in capital goods stocks, stay informed on developments in the capital goods company, share market trends, and general economic conditions. It is advised to regularly follow financial news, earnings reports and industry insight to make informed decisions.

Factors Affecting Capital Goods Stocks

Investing in capital goods stocks is not just about putting money in shares but also about understanding the aspects that shape the growth of these stocks. The following is the breakdown of some factors that affect the capital goods stocks:

  • Technological Advancements:

    Companies that understand the importance of technological progress, such as developing smarter machinery or streamlining their working patterns, can gain a competitive advantage over their competitors. Failure to keep up with technological trends can lead to loss of market share and profitability.
  • Economic Conditions:

    When economic conditions favour businesses, demand for capital goods stocks rises as companies gear up for expansion and new projects. However, during economic slowdowns, this demand can take a hit, impacting the performance of capital goods stocks.
  • Government Policies:

    Government policies, along with infrastructure spending, play an important role in shaping the demand for capital goods stocks. When the government allocates funds for infrastructure development or any related tasks, it creates a rise in demand for these stocks. However, if policies change or the budget shrinks, the demand for capital goods may be affected. Staying informed about government moves and infrastructure plans is crucial for investors in this sector.

Advantages & Risks of Investing in Capital Goods Stocks 

The following is the breakdown of the advantages and risks of investing in capital goods stocks:

Advantages of Capital Goods Stocks

Risks of Capital Goods Stocks

Capital goods companies can experience revenue growth during expansion, which offers long-term growth opportunities to investors.

Capital goods stock prices can be volatile, which leads to market fluctuations.

Capital goods shares usually perform well during the economic recovery, which allows investors to increase capitalised demand for these products.

This sector is highly competitive, which may impact the growth potential and profitability.

Some established companies in this sector may share their profits with shareholders through dividend payments, which provides a source of regular income.

These stocks are subject to government regulations, which may create uncertainties and challenges in their operations, further affecting stock performance.

Conclusion
Investing in the best capital goods stocks through a user-friendly stock market app can be a wise decision for investors seeking long-term growth opportunities. This sector is crucial in driving economic progress and benefits from infrastructure expansion and industrial development. However, investors should carefully evaluate technological advancements, economic conditions, and government policies that can impact the performance of capital goods shares. A diversified portfolio can help reduce risks associated with capital goods sector stocks. 

FAQs on Capital Goods Stocks

Technological advancements, economic conditions, and government policies are some of the common factors that affect the capital goods sector stocks.

The advantages of the capital goods share list include revenue growth opportunities, economic recovery benefits, and potential dividend income.

You can research companies with consistent growth, positive earnings trends, and strong market presence. This will help you to find the best capital goods stocks

The capital goods sector contributes to manufacturing output and drives economic growth through infrastructure development.

Yes, investing in capital goods stocks can provide diversification benefits.

You can find information on the capital goods share list on financial websites, stock market apps, and company reports can provide details on capital goods stocks.