According to a report by Nuvama Institutional Equities, activity in the industrial sector is accelerating after the monsoon, with order inflows expected to remain elevated in Q3 FY26. The report projects that the cumulative order book of power sector-linked companies could expand to around ₹12 lakh crore during the period.
The brokerage said the current quarter appears supportive for the power and industrial sectors after disruptions caused by heavy rainfall in the previous quarter. Excess rainfall had stalled several projects, halted on-site execution, and disrupted supply chains. With weather conditions normalising, both order inflows and execution have begun to improve. Nuvama expects industrial sector activity to accelerate in Q3 FY26, with growth estimated at around 17 percent.
The report noted that companies’ aggregate order books are expanding rapidly and could reach approximately ₹12 lakh crore. The largest share of incremental orders is expected to accrue to power sector companies, particularly those operating in the high-voltage transmission and distribution segment.
Nuvama said project execution slowed in the previous quarter due to the monsoon, affecting work on roads, power lines, transmission towers, and plant sites. With the end of the monsoon, stalled projects are resuming execution. New orders are also being awarded across power generation, renewable energy, transmission lines, substations, and grid-related works. Rising electricity demand from data centres, electric vehicles, semiconductors, and electronics manufacturing is supporting order inflows, resulting in sustained workload visibility for industrial companies.
The brokerage identified high-voltage transmission and distribution as the primary growth driver in the current quarter. New order inflows in this segment are expected to rise by about 44 percent, while execution growth is projected at around 27 percent. Expansion in renewable energy capacity is driving the need for additional transmission lines and substations to connect projects to the grid. Government efforts to strengthen grid infrastructure and address network constraints are also supporting sustained ordering activity. The execution slowdown seen in the previous quarter due to rainfall is expected to reverse in the current quarter.
An order book of around ₹12 lakh crore indicates multi-year revenue visibility for companies, according to the report. A larger order backlog provides improved visibility on future revenues. Orders are being supported by projects across power plants, renewable energy, transmission lines, substations, railway electrification, and industrial infrastructure. This is expected to influence earnings and margins, subject to uninterrupted on-site execution.
The report also highlighted continued uncertainty around tender policies related to Chinese companies. Media reports have suggested that the government may allow Chinese firms to participate in certain government tenders, though there has been no official confirmation. Nuvama said that even if any relaxation is implemented, it is likely to be limited to smaller and less critical components, with large and sensitive projects remaining restricted. This could allow domestic companies to focus further on manufacturing and execution capabilities.
In contrast to the power sector, private investment in non-power industrial segments remains weak. Nuvama said a significant recovery in private capex is unlikely over the next six to nine months. Current investments are largely concentrated in renewable energy, data centres, semiconductors, and electronics manufacturing, while sectors such as cement, steel, and heavy machinery continue to see slower investment activity.
Engineering, procurement, and construction companies are expected to benefit from post-monsoon normalisation, with site execution resuming and supply chains stabilising. The report said companies such as KEC International and KPIL could deliver performance within their guidance ranges in the current quarter. For L&T, order growth in FY26 is expected to be in the range of 12 to 15 percent, with large Middle East orders beginning to move into execution and supporting earnings in the second half of the year.
Nuvama identified GVTD, Hitachi Energy, BHEL, and CG Power as preferred companies within the power and industrial segments, citing exposure to high-voltage transmission and distribution, power equipment, and large infrastructure projects.
