L&T, MTAR: Chandrayaan-3 component makers reach for the sky at the bourses

India became the first country to land a spacecraft near the moon's south pole with Chandrayaan-3

As India successfully landed Chandrayaan-3 near the moon's south pole on Wednesday, becoming the first country in the world to achieve the feat, analysts see shares of the companies that supplied components for the lunar mission, reaching for the moon too.

The successful landing of Chandrayaan-3, they believe, will give a fillip to these companies, providing them a launchpad to skyrocket into the global space market.

"The revenue from this mission might be nominal; but by successfully participating in this critical mission, these companies have showcased their sophisticated technology and strong leadership with zero tolerance towards error. With this, they may support various global space missions, rendering their expertise to different countries," said Kranthi Bathini, director-equity at WealthMills Securities.

At the bourses, shares of the 13 companies that supplied equipment ranging from electronics components to metal gears used in a rocket's communication and navigation surged up to 15 per cent led by Centum Electronics.

Shares of the small-cap company, which supplied critical modules and systems for the mission, hit a fresh 52-week high of Rs 1,694 apiece in the intraday trade on Wednesday before settling at Rs 1,646, up 15 per cent.

Those of Paras Defence, which contri­b­uted to the naviga­tion system, surged 5.5 per cent; MTAR Technologies 4.8 per cent; and Midhani (Mishra Dhatu Nigam) 3.9 per cent.

Furthermore, shares of Hindustan Aeronautics, which supplied key components to National Aerospace Laboratories, where Launch Vehicle Mark (LVM)-3 was tested, hit a record high of Rs 4,050 in the intraday trade, crossing the Rs 4,000-mark for the first time.

Other stocks like Linde India, Aventel, Larsen and Toubro (L&T), and Bharat Heavy Electricals gave returns in the range of -1.35 per cent to 3.2 per cent. By comparison, the S&P BSE Sensex ended 0.3 per cent up at 65,433 levels.

Several private sector firms were an integral part of Chandrayaan-3 with 85 per cent of the LVM-3 rockets coming from the private sector.

MTAR Tech, for instance, reportedly provided parts for the lander’s propulsion system and the rover’s navigation system; Midhani provided alloys for the lander's heat shield and the rover's wheels; and L&T was responsible for critical booster seg­ments.

The enthusiastic participation by private companies comes on the back of India's Space policy, which aims to allow the Indian Space Research Organisation (Isro) to encourage new-generation entities to participate in space exploration and human presence in outer space.

According to Santosh Meena, head of research at Swastika Investmart, the successful landing of Chandrayaan-3 will support the ongoing rally in the stock prices in the near-term.

"Investors should maintain their positions, viewing any profit booking as a chance for long-term entry. However, for traders, chasing these stocks immediately after the event isn't advisable. They should wait for potential profit booking to enter at favorable levels," he said.

On a year-to-date (YTD) basis, shares of Avantel have soared 206 per cent, while those of Centum Electronics have jumped 130 per cent in calendar year 2023. Other players have seen their price appreciate between 19 per cent and 73 per cent as against the benchmark Sensex index's 7.5 per cent gain during the period, ACE Equity data shows.

"Shares of aerospace and defence companies have more-than-doubled investors' wealth over the past one year; hence, investors may take some profit off the table. That said, given that defence is an emerging theme in India, there is a lot of revenue visibility for these companies. They remain good long-term bets," added Bathini of WealthMills Securities.

In the April-to-June quarter of financial year 2023-24 (Q1-FY24), these companies reported net profit between Rs 7 crore (Centum Electronics) and Rs 2,493 crore (L&T).