In-Depth Sectoral Rotation Tracker: June 24, 2025
Key Shifts and Leadership Trends
In this post, I discuss sectoral rotation as of today, June 24, 2025. Specifically, I focus on the compelling momentum in India’s Heavy Electrical Equipment and Auto Components sectors to give you an objective perspective on their investment potential.
The Heavy Electrical Equipment sector is thriving amid India’s infrastructure and energy transition boom, driven by government policies and private capex, with companies like Kirloskar Pneumatic leading the charge.
Meanwhile, the Auto Components sector is capitalizing on domestic demand, the EV revolution, and global supply chain shifts, with standout performers like Federal-Mogul Goetze and Endurance Technologies.
In this analysis, I’ll dissect the growth drivers, financial metrics, and valuations of these sectors to pinpoint where opportunities lie in the current market cycle.
Let’s dive into what’s fueling these sectors and whether they deserve a place in our investment strategy.
Heavy Electrical Equipment: Powering Up on Capex Tailwinds
Fundamental Thesis: This sector is at the epicenter of India's multi-decade infrastructure build-out and energy transition. The primary growth engine is a massive, twin-engine capex cycle fueled by both government initiatives and a revival in private sector investment. Key drivers include:
Grid Modernization: Upgrading and expanding India's transmission and distribution (T&D) network to meet rising power demand and integrate renewable energy sources. This is projected to require over US$400 billion in investment by 2030.
Policy Support: Government schemes like the Revamped Distribution System Scheme (RDSS) are designed to improve the financial health and operational efficiency of power distribution companies, directly driving orders for equipment manufacturers.
Industrial & Railway Capex: Increased manufacturing activity and dedicated railway electrification projects create substantial demand for electrical equipment. This has translated into record-high order books for major companies, providing unprecedented revenue visibility for the next two to three years and forming a robust fundamental foundation for the sector's outperformance.
Stock-Specific Analysis & Weekly Catalysts: Several companies in the Heavy Electrical Equipment sector exhibited phenomenal growth and excellent cash flow generation in Q4FY25.
These include the following: