Capital goods sector: MOSL anticipates genset demand recovery, maintains ‘Buy’ on Cummins India and KOEL

Motilal Oswal Securities notes that demand for gensets in the capital goods sector showed weakness in October and November 2024 but has started recovering. The low-to-mid kVA ranges, which are more price-sensitive and competitive, experienced pronounced softness, while higher kVA ranges sustained normal demand levels.

Prices have corrected by 6-7% but remain elevated YoY. Channel partners anticipate this transitionary phase to persist for another quarter before normalizing demand. MOSL remains optimistic about the long-term prospects of the sector, maintaining ‘Buy’ ratings on Cummins India with a target price of ₹4,250 and Kirloskar Oil Engines (KOEL) with a target price of ₹1,540.