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Brokerage firm Antique Research said that the Indian defence story has not diminished, rather the outlook has further improved offering significant earnings visibility.
The brokerage note that current valuations, given the earnings trajectory, are not unreasonable. Moreover, the recent correction provides a meaningful opportunity to accumulate defence stocks. Antique Research reiterated its bullish stance on the sector.
Antique retains its positive stance on the defence sector and believes that the recent price correction provides a good entry point.
Its top picks include Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics, Mazagon Dock Shipbuilders, and PTC Industries.
While the story of DPSUs is well understood due to their size and range of technologies, emergence of private sector is expected to provide huge investment opportunities.
“Importantly, there is a sizeable number of companies in defence sector, not publically listed, with unique technologies and capabilities – the space that will be very exciting in future. We maintain Buy on HAL, BEL, BDL and Mazagaon Docks (Pure play DPSUs) and PTC Industries (emerging global player titanium and super alloys precision engineering),” it said.
Large ticket items like light combat helicopters, light combat aircraft Mk 1A, and upgradation of Su-30 MKI aircraft worth ₹2.2 lakh crore led to this sharp growth, it said. Domestic defence production also is on rise, which stood at over ₹1.3 lakh crore in FY24, and is expected to rise to ₹1.8 lakh crore in FY25.
Out of the 17 analysts that track HAL, 16 of them have a ‘Buy’ rating, while the other one has a ‘Sell’ rating.
Out of the 28 analysts who have coverage on Bharat Electronics, 22 of them have a ‘Buy’ rating, while three each have a ‘Hold’ and ‘Sell’ rating, respectively.
As many as 10 analysts have coverage on Bharat Dynamics, where seven of them have a ‘Buy’ rating, two say ‘Hold’, while the other one has a ‘Sell’ rating on the counter.
