Defence stocks in India are anticipated to stay in the spotlight on Monday following the Defense Acquisition Council’s (DAC) meeting on Friday to distribute the ₹80,000 crore order.
Stock market experts predict that when the Indian stock market reopens on Monday, value purchasing in the defense sector would cause defense businesses with significant CAPEX to slip from Dalal Street bulls’ attention.
Speaking on how the outcome of the DAC meeting might affect the Indian stock market, Pace 360’s Chief Global Strategist and Co-Founder Amit Goel stated, as quoted by Mint, “The recent military order of 80,000 crores signifies a significant YoY increase in military spending. This amount, constituting 13% of the military sector’s budget for FY 24–25, aligns with the government’s Long-Term Integrated Perspective Plan and Atmanirbharta campaign.”
Companies to get an edge-0ver
Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio mentioned, “Defence PSUs like Bharat Electronics Ltd. (BEL), Hindustan Aeronautics Ltd. (HAL), Bharat Dynamics Ltd. (BDL), etc. are expected to be the biggest beneficiaries of the project approval of ₹84,560 crore.”
In a significant step to greatly improve the armed forces’ combat capabilities, Sinha continued, the Defense Acquisition Council (DAC) granted initial approval in December 2023 to defense acquisition projects totaling Rs. 2.23 lakh crore, which included the purchase of 156 Prachand combat helicopters and 97 Tejas light combat aircraft.
Defence stocks to be considered for the purchase
A Pace 360 expert recommened, “Defence-related stocks, especially HAL and BEL, stand to benefit from this, with both companies having robust order books and efficient delivery capabilities. Additionally, both companies also have their capital expenditures in place, further benefiting the stocks. BEL, with its strategic diversification plans into sectors like metro, railway, and artificial intelligence, presents a compelling investment opportunity compared to the relatively overvalued HAL. Additionally, BEL’s involvement in supplying equipment for key ship-building programs such as the Next Generation Offshore Patrol Vessel, Next Generation Missile Vessels, and cadet training ships, adds to its growth potential.”
What will be the HAL share price status?
Manish Chowdhury, Head of Research at StoxBox stated, “HAL share looks a favorable and long-term play on the growing capex and modernization of India’s air defense system. The industry tailwinds such as the government’s focus to indigenously procure its defense requirements along with the company’s inherent strengths such as a strong order book and improvement in profitability due to economies of scale and operating leverage make it a compelling story from a long-term perspective.”
What will be the BEL share price status?
Chowdhury said, “As far as BEL is concerned, we believe that the company would play a critical role in Make in India and AtmaNirbhar Bharat initiatives and would benefit from its strong execution, robust manufacturing and R&D base, strong balance sheet and healthy return ratios.”
