India Inc's order book doubled in the fourth quarter (January-March) of the last financial year compared, to the year-ago period.
At Rs 92,290 crore, it was also the biggest ever order inflow in any quarter, beating the earlier high of Rs 74,775 crore recorded during the quarter ended September 2009.
Data, culled by Business Standard Research Bureau from announcements made to the stock exchanges, showed that the engineering and construction sector accounted for the highest position (35.5 percent) of the total inflow. Power followed closely with 34.4 percent.
The order -- from private sector and central and state governments are for building power plants, roads, and factories and houses, in addition to capital equipment and engineering.
The party is expected to be a long-drawn one, with analysts saying the growth could even improve in the next few quarters. "In the first half of calendar year 2011, we expect to see lot of action in the roads and power sector," Shailesh Kanani, analyst, Angel Broking said.
Balarami Reddy, Executive Director (Finance) of IVRCL agreed. "Business is improving and orders are coming in continuously without gap. But, we are not going for every other order as we are in a position to select the projects we want to go in for," Reddy said. Hyderabad-based IVRCL has added orders to the tune of Rs 3,000 crore in the fourth quarter.
Others are equally optimistic. Take Larsen & Toubro. The engineering giant has become the first private sector player in the country to achieve a cumulative Rs 1,00,000 crore-plus order book.
The company, which had an order book of Rs 91,104 crore as on December 31, 2009, got another lot of orders worth more than Rs 9,000 crore in the past two-three weeks. "It's a stupendous achievement," said L&T Chairman and Managing Director A M Naik.
According to Edelweiss Research, the surge in order inflows indicates that the domestic industry has more or less made up for the blip caused by the financial crisis in 2008-09. Over the next few quarters, the research firm expects healthy order backlogs of the companies to translate into earnings growth.
In the January-March quarter, around 16.5 percent orders were to build highways while the remaining 13.6 orders were for water projects, IT, pharma and oil gas sectors.
Order intake has been robust, particularly from NHAI road projects, urban infrastructure and buildings. The NHAI has awarded contract worth Rs 13,000 crore to built highways, roadside tunnels and state roads on the build-operate-transfer model. The listed public sector undertaking awarded engineering, construction and power equipment contracts worth Rs 18,000 crore.
The State government awarded contract worth Rs 20,141 crore for construction, power and water projects. The private companies also showed capex spending, awarding engineering and construction projects worth Rs 23,500 crore.
In the quarter ended December 2009, the order inflow had declined 42 per cent sequentially quarter and a marginal 1.5 percent year on year due to delays in project award from the government as well as lack of fresh capital expansion from the manufacturing sector.
The capital goods industry is yet to see considerable increase in order flows from other segments as the real revival of the industrial Capex cycle seems to be some time away, said Mumbai based Centrum Broking in a research report.
While there has been a pick up in the replacement demand for various power equipments, the industry is yet to see considerable increase in orders from capital intensive projects. Edelweiss indicated that the growth in order inflows in FY11 was likely to be positive for companies in the capital goods sector on back of an improving economic scenario.
