 "GRSE, BEML, BDL gain up to 6% as DAC clears Rs 21,772 cr defence proposals")
Shares of defence and related companies rallied up to 6 per cent on the BSE in Wednesday’s intra-day trade after the Defence Acquisition Council accorded Acceptance of Necessity (AON) for five capital acquisition proposals worth over Rs 21,772 crore.
Approvals include the procurement of 31 Water Jet Fast Attack Crafts, 120 Fast Interceptor Craft, Electronic Warfare Suite, Next Generation Radar Warning Receiver and 6 Advanced Light Helicopters. It has also accorded approval for the overhaul of T-72 & T-90 tanks, BMP- and engines of Sukhoi fighter aircraft which will enhance the service life of these assets.
Garden Reach Shipbuilders & Engineers (GRSE), Mishra Dhatu Nigam (MIDHANI), Paras Defence and Space Technologies, Data Patterns (India), BEML, Bharat Dynamics (BDL), Bharat Electronics (BEL) and Hindustan Aeronautics were up in the range of 2 per cent to 6 per cent on the BSE in intra-day trades. In comparison, the BSE Sensex was up 0.27 per cent at 81,063 at 09:32 am.
In the past one month, these stocks have outperformed the market by surging between 8 per cent and 17 per cent, as compared to 3 per cent rise in the benchmark index.
As the approvals have now been permitted, the tenders for all the platforms/systems would be floated in the coming period. Companies such as Garden Reach Shipbuilders & Engineers, L&T and Goa Shipyard, Cochin Shipyard and Mazagon Dockyard would be the key beneficiaries for 31 Water Jet Fast Attack Crafts and the fast interceptors crafts, according to ICICI Securities.
The contract of Electronic Warfare Suite would have the key beneficiaries from BEL, Data Patterns while the tenders for Advanced light helicopters would see participation from HAL and the electronics and missiles for the helicopters would be supplied to it from BEL and BDL, the brokerage firm said.
The overhaul tenders would have HAL, BEL and other state-owned companies as beneficiaries. Mishra Dhatu Nigam would be the key beneficiary for supplying super alloys and titanium alloys towards the tender, it added.
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Among individual stocks, BDL was up 3.5 per cent at Rs 1,193.55 on the BSE in intra-day trade amid heavy volumes. In the past eight days, the stock rallied 29 per cent from a level of Rs 926.70 on November 21.
According to CRISIL Ratings, BDL’s revenue in the near term is expected to grow by 28 per cent-30 per cent in fiscal 2025 and 13-15 per cent on year in the medium term led by stable order execution rate and healthy order book addition expected which stood at Rs 19,434 crore as on March 2024. BDL has been focusing on indigenization of components and reducing its dependence on imports. Operating margins on the other hand, are expected to moderate and remain range bound between 17-18 per cent in the near to medium term, on the back of normalization of product mix and ramp up expected in R&D spends, rating agency said in rationale dated November 19.
Shares of MIDHANI surged 6 per cent to Rs 392.35 on back of two-fold jump in average trading volumes. The company is engaged in the business of manufacturing of superalloys, titanium, special purpose steel and other special metals.
By 2025, the Ministry of Defence is poised to receive a turnover of Rs 1.75 trillion in the aerospace and Defence manufacturing sector. Additionally, the Ministry of Defence aims to achieve an export worth Rs 35,000 crore. The Government of India also aims to attract investment of Rs 20,000 crore by FY 2025 through its Defence Industrial Corridors (DICs) for the development of the Defence industry.
The Indian Aerospace and Defence sector, is a rapidly evolving industry in India. It is an integral part of the long-term strategic goals and targets of the country. The Indian Defence and commercial aircraft market in India is huge. Previously it was valued at USD 27.1 billion and it is expected to grow at a compound annual growth rate (CAGR) of 6.99 per cent to attain a market size of USD 54.4 billion by 2033, MIDHANI said in its FY24 annual report.