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Defense PSU Stocks to Buy: Brokerage house Antique Stock Broking says that DAC's approval for defense purchases is a great opportunity for Indian defense manufacturers such as HAL, BDL and BEL. Brokerage is bullish on these stocks.
Defense PSU Stocks to Buy: The effect of Defense Acquisition Council (DAC)'s approval for defense purchases worth Rs 2.23 lakh crore was seen on government defense shares (Defense PSU Stocks) on Friday (December 1). On the basis of strong order book and better revenue outlook of government defense companies, there may be a huge rise in the stocks of these companies in future. Brokerage house Antique Stock Broking says that DAC's defense procurement approval is a tremendous opportunity for Indian defense manufacturers such as Hindustan Aeronautics (HAL), Bharat Dynamics (BDL) and Bharat Electronics (BEL). Brokerage is bullish on these three Defense PSU Stocks.
The Defense Acquisition Council (DAC) has approved proposals worth Rs 2.23 lakh crore to enhance the operational capabilities of the Indian Defense Forces. The government has given Approval of Need (AoN) to proposals worth about Rs 2.76 lakh crore under different categories of capital procurement in FY24, which promotes domestic manufacturing as per DAP2020.
HAL, BDL & BEL: Investors will earn huge profits
On this big update of the defense sector, brokerage house Antique Stock Broking has advised to buy on defense PSUs shares Hindustan Aeronautics (HAL), Bharat Dynamics (BDL) and Bharat Electronics (BEL). Buying is recommended on HAL with a target of Rs 2589 (28x 1HFY26E EPS). BDL is to be bought for a target of Rs 1420 (28x 1HFY26E EPS) while for BEL (28x 1HFY26E EPS) the brokerage has set a target of Rs 1161.
The brokerage says that approval has been received for AoN projects worth Rs 2.79 lakh crore in FY24. We believe that there is strong growth opportunity for defense PSUs like HAL, BDL & BEL in the near to long term. Therefore, there is buying advice on these three stocks. A rise of more than 5 percent was seen in BDL in Friday's session. HAL managed to gain more than 3 percent and BEL managed to gain more than 1 percent.
Defense PSU Stocks: Brokerage Opinion
According to the brokerage, HAL can be the biggest beneficiary of the approval from DAC. This is because DAC has approved the proposal to acquire 97 LCA Mark 1A fighter jets worth Rs 65 thousand crore. With this, the way has been cleared for the Indian Air Force to get this modern fighter jet. The council has approved the upgrade plan to purchase 156 LCH Prachanda helicopters and 84 Su-30MKI fighters. HAL's order book in FY23 is around Rs 82,000 crore.
The brokerage says that BEL's 1HFY24 order inflow is Rs 15400 crore (+574% YoY). In this, big orders have been received from BDL and Cochin Shipyard. The company has an order backlog of about Rs 68700 crore. Talking about BDL, the order momentum of the company remains intact. Orders worth Rs 25,000 crore are expected by FY27E. BDL had orders worth Rs 1660 crore in 1HFY24.
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