After the 2024 elections and the latest budget, the government has shown a tilt towards consumption rather than aggressive capital expenditure. While the overall capex growth is moderating—from a previous compound annual growth rate (CAGR) of around 15% during 2021-24 to a medium-term CAGR closer to 8-10%—certain pockets remain robust.
Quadros highlighted that power and defence continue to see strong investment. “If you are in the right end markets and in the right pockets, there’s still potential to do very well on a stock-specific basis,” she said.
On the private sector capex front, the analyst noted a mixed picture. While broader private capex is yet to pick up in a big way, specific segments like housing, data centres, and power are showing significant traction.
Larger corporate groups and mid-size players are actively expanding capacity, and certain PLI-linked schemes are further driving private sector investment. However, a widespread revival will require more substantial investments in infrastructure-heavy industries such as cement, steel, and oil and gas.
For investors looking to back capex themes, Quadros suggested focusing on companies positioned in these resilient end markets. In the power equipment and transmission & distribution (T&D) segment, companies like Siemens Energy, Hitachi Energy, and GE Vernova T&D have a strong presence.
Defence-related opportunities exist in larger players like Hindustan Aeronautics and Bharat Electronics, as well as in select shipbuilding firms. Data centres also present a compelling avenue, with beneficiaries spanning power equipment, automation solutions, and select technology-focused companies.
Quadros stated that while broader market growth may moderate, stock-specific opportunities in the right sectors and companies remain significant. “Valuations will matter, but for those in the right pockets, the potential is strong,” she noted.
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