Capital goods finally have a reason to cheer. Here's why

After a long time the capital goods sector has reasons to celebrate.

ABB bagged a Rs 4,000 crore order from Power Grid Corporation (PGC) to deliver an ultrahigh-voltage direct current (UHVDC) transmission system. It has been a long time since the sector has received such a huge order.

The company’s stock reacted strongly in the market and currently trades at Rs 597.75, up by 4.65 percent. However, ABB India will book Rs 500 crore of the total order value in India apart from contributing to the project by way of design and engineering services.

[caption id=“attachment_164085” align=“alignleft” width=“380” caption=“Reuters”]  [/caption]

This will be the world’s first ultra high voltage multi-terminal system to supply hydropower across 1,700 kms, with highest ever convertor capacity. It will be a new global benchmark in HVDC technology.

More from Investing

MSMEs are breaking the traditional convention. Look who’s funding them Scale-up your startup without an investor! Here’s how

India’s power distribution system is creaking and has the highest transmission and distribution (T&D) losses in the world (even after excluding theft). UHVDC transmission system will sharply reduce losses as well as have the means to supply electricity to 90 million people. At its peak capacity the convertor capacity with be 8,000 MW.

Power sector has been plagued by defaults from state electricity boards (SEBs) and lack of orders from the central and state government along with fewer generation capacities due to fuel linkages problem. An efficient T&D system would help generate 20 percent extra power.

An UHVDC system would require ancillary power equipments in order to convert the High Voltage power to usable power. No reason then, that the entire sector is celebrating this year-end gift.

L&T trades 2 percent higher at Rs 1026, Areva T&D trades 2 percent higher at Rs 153 and BHEL is up by 3 percent at Rs 244.