Bharat Electronics, Solar Industries among top 7 defence stocks to buy
India’s defence exports have reached ₹21,083 crore in FY24, registering a growth of 32.5% year-on-year (YoY). The contributions from the private sector and the defence PSUs were around 60% and 40%, respectively.
With Lok Sabha elections around the corner and a moral code of conduct in place, the next round of ordering is likely to commence post-elections. However, export orders are likely to continue in the interim and analysts at ICICI Securities believe Azad Engineering, Dynamatic Technologies and Solar Industries are likely to be the key beneficiaries.
The award of the Pinaka order, which is believed to be in an advanced stage, and the orders for QRSAM and MRSAM are much awaited. These orders are likely to benefit Bharat Electronics (BEL), Bharat Dynamics (BDL) and Astra Microwave Products.
ICICI Securities stays positive on the defence sector and taking cognizance of the recent stock price movement and ordering prospects, it recommends seven defence stocks to buy. The brokerage firm’s list of defence stocks to buy includes Solar Industries, Astra Microwave Products, Azad Engineering, BEL, Bharat Dynamics and Dynamatic Technologies.
Among these, Solar Industries, Astra Microwave Products and Azad Engineering are three top picks in the defence space by ICICI Securities.
Here are the details on these top defence stocks to buy:
Astra Microwave Products | Buy | TP: ₹800
Astra Microwave is expecting a production order of UTTAM radars soon for the first series of limited production. Around 440 UTTAM radars are likely for LCA Mk1, considering the additional 97 nos. that are being discussed. The company is also awaiting RFP from DRDO for Su-30 radars.
ICICI Securities has a ‘Buy’ call on Astra Microwave with a target price of ₹800 per share.
Azad Engineering | Buy | TP: ₹1,600
Azad Engineering shares were listed on stock exchanges in December 2023 and have jumped more than 86% from its listing price. ICICI Securities has a ’Buy’ rating on the stock with a target price of ₹1,600 per share.
Also Read: Anand Rathi lists 2 ‘emerging picks’ including Infosys; details here
Solar Industries | Buy | TP: ₹10,950
Solar Industries has successfully flight-tested its indigenously developed 125 kg bomb from SU-30 fighter jets. The IAF has requested Solar to develop a 1,000 kg bomb for SU-30 and Mirage 2000 aircraft. The company has secured a ₹14 million contract to supply 30,000 multimode hand grenades to the CRPF. Its potential orders include the Pinaka rockets which is most likely in the next 3-6 months.
ICICI Securities has a ‘Buy’ call on Solar Industries shares with a target price of ₹10,950 per share.
Dynamatic Technologies | Buy | TP: ₹10,250
The brokerage firm has initiated coverage on Dynamatic Technologies with a ‘Buy’ rating and a target price of ₹10,250. It expects the company’s aerospace and defence segment to be the earnings driver, resulting in an EBITDA CAGR of 19% and an EBITDA margin of 17-18% through to FY27E.
Also Read: Stocks to Buy: 9 mid cap picks by Motilal Oswal
Bharat Dynamics | Buy | TP: ₹2,015
ICICI Securities expects order inflow of ₹20,000 – 25,000 crore in the next 3-4 years for Bharat Dynamics from MRSAM for Indian Navy; QRSAM, LRSAM and Akash NG weapon system; and Astra Mark-I missiles. The brokerage firm has a ‘Buy’ call on the stock with a TP of ₹2,015 per share.
Bharat Electronics | Buy | TP: ₹215
The order pipeline of Bharat Electronics includes a Tank upgrade worth ₹3,000 crore which is likely by the start of CY24 and Uttam AESA radar in Tejas MK-1A. The brokerage expects Sukhoi upgrades to incorporate Virupaksha AESA radar.
ICICI Securities recently raised Bharat Electronics target price to ₹215 from ₹203 earlier and maintained a ‘Buy’ call.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 10 Apr 2024, 01:17 PM IST
