Antique Stock Broking has reaffirmed its ‘Buy’ rating on five Public Sector Undertaking (PSU) defence stocks: Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Mazagon Dock Shipbuilders Ltd (MDL), and Garden Reach Shipbuilders & Engineers Ltd (GRSE). The brokerage firm, however, suggested a ‘Hold’ on Cochin Shipyard Ltd.
The positive outlook follows the Defence Acquisition Council’s (DAC) approval of proposals worth ₹1.4 lakh crore, aimed at enhancing the operational capabilities of the Indian Armed Forces. These include future-ready combat vehicles, which are expected to benefit companies like Bharat Forge, Mahindra Defence, and Tata Advanced Systems. Additionally, the procurement of Air Defence Fire Control Radars and Dornier-228 aircraft is seen as advantageous for BEL and HAL, respectively.
Key Highlights:
- Hindustan Aeronautics Ltd (HAL):
HAL’s order book stood at ₹94,000 crore by the end of FY24, providing a strong revenue outlook. With upcoming orders worth ₹26,000 crore for Su-30 MKI aircraft engines, HAL’s order book is expected to reach ₹1.2 lakh crore, with deliveries starting from FY26. Antique Stock Broking has set a target price of ₹6,145 for HAL. - Mazagon Dock Shipbuilders Ltd (MDL):
MDL’s order book as of August 14, 2024, was ₹40,400 crore, the highest among Indian shipyards. This includes major projects like P17A stealth frigates and P15B destroyers. With seven planned deliveries over the next two years, MDL’s future looks promising. The target price for MDL is ₹5,486. - Bharat Electronics Ltd (BEL):
BEL stands to benefit from the approval of air defense radars, with a target price of ₹381. The company has a strong order pipeline, which is expected to support its growth in the coming years. - Bharat Dynamics Ltd (BDL):
BDL’s growth is also on the radar, with a target price of ₹1,579. The DAC’s recent approvals provide a positive outlook for the company as it continues to play a crucial role in India’s defense manufacturing. - Garden Reach Shipbuilders & Engineers Ltd (GRSE):
GRSE’s current order book stands at ₹25,230 crore, with significant projects under execution. The company’s future is bolstered by ongoing and upcoming orders, with a target price of ₹2,092.
The information provided is for informational purposes only and should not be taken as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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