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Shares of three capital goods firms Thermax Ltd., CESC Ltd. and KEC Ltd. gained up to 7% on Friday, October 9 after brokerage firm Kotak Institutional Equities upgraded its ratings on these stocks.
Kotak Institutional Equities has upgraded Thermax to "buy" and has upgraded CESC and KEC to "add" ratings. However, despite the upgrade, Kotak also cut CESC's target price by 15.7%.
Kotak Upgrades Thermax
Kotak has upgraded Thermax to "buy' with a target price of ₹4,000 per share. This indicates an upside of 27.5% from its previous close.
Kotak said the Thermax stock trades at 35 times its estimated financial year 2028 earnings, which it finds attractive, given its expectations of a 16% revenue compound annual growth rate (CAGR) over financial year 2026-2029.
A sizeable 5-6% revenue CAGR boost is likely to come from businesses in their early stages where Thermax enjoys strong competitive positioning and the market is starting to open up, namely data centres (US, India), and compressed biogas, Kotak said in its note.
In addition, Thermax's margin outlook remains favourable, supported by the completion of legacy orders and increasing contribution from higher-margin segments such as power, Thermax Babcock and Wilcox Energy Solutions (TBWES) and services.
The stock has cooled off from the highs and now traded 3.8% higher at ₹3,255.8. The stock has declined nearly 11% in the last one month and therefore, has trimmed its year-to-date advance to 6%.
CESC Upgrade From Kotak Comes With A Target Cut
CESC has been upgraded to "Add" by Kotak from the earlier rating of "reduce", but cut its price target to ₹145 from ₹172 earlier, thereby trimming its potential upside to 12.6% from the stock's closing price on Thursday.
Kotak said the stock's 35% correction from its peak was driven largely by slower-than-expected progress in renewable capacity addition. At 10 times its estimated price-to-earnings ratio for FY28, its valuations have become more compelling, the brokerage said.
It believes improved execution towards the management's medium-term goal of doubling profit after tax (PAT) over FY25-30, supported by ₹33,000 crore of investments across renewables and distribution businesses, could drive better stock performance.
CESC shares gained 2% to hit an intraday high of ₹131.4 apiece on Friday. The stock has fallen 12.8% in the past month and is down 21.9% in 2026, so far.
KEC Upgraded After Order Wins
The brokerage has upgraded the stock to "add" with a target price of ₹400 per share. This indicates an upside of 14.,4% from its previous closing price.
It said KEC's stock has corrected over 60% in the past year, driven by:
Weak margin performance in the non-transmission and distribution (T&D) segments (civil and railways)
Slower execution in the water segment due to delayed payments
A seven-month debarment from participating in PGCIL tenders and
Execution disruptions in the West Asia region amid geopolitical tensions, the brokerage said.
Kotak said while margin pressure is expected to persist over the next four quarters and model EBITDA margins of 6% through the first half of FY28 as legacy projects are executed, with a strong T&D opportunity pipeline across India and international markets, along with rising contribution from the cables business, should support a gradual recovery in execution and margins.
Despite the upgrade, Kotak has cut KEC 's Earnings Per Share (EPS) estimates for financial year 2027-2029 by 6% to 26% respectively.
Shares of KEC gained 4.7% to hit an intraday high of ₹366.4 apiece on Friday. It has declined 10% in the past month and is down 52% this year, so far.
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