Engineering: Just keeps getting better

ABB, L&T and BHEL are likely to register strong growth of over 14-75% YoY inorder inflows in Q4FY06E, resulting in record order backlog. We expect thesecompanies to register 19-36% YoY revenue growth based on the robust orderbacklog at the beginning of Q4FY06E. Moreover, the recent Budget has given afresh impetus to all infrastructure sectors – especially power, roads, ports andirrigation – thereby strengthening the order pipelines further. Faster executioncycles and stable commodity prices (especially steel) are likely to boostprofitability and consequently earnings of these companies by 29-42% YoY inQ4FY06E. L&T is our top pick in the sector; we reiterate Buy on ABB and BHEL.

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