Defence PSUs can deliver good returns to investors, shield portfolio

The debt-free status is positive; robust order book and execution will drive earnings

Government-owned defence equipment makers, such as Bharat Electronics (BEL), Bharat Dynamics (BDL), Hindustan Aeronautics (HAL) and Cochin Shipyard, have attracted investors, given the 53-142 per cent gains in their share price since March lows.

While the scarcity of growth across sectors and high market volatility are partly responsible for the odds tilting in their favour, investor sentiment has got a boost from their better-than-expected March quarter performance, which is led by order execution and, in turn, improved margins. The stocks, too, were trading at attractive valuations. And, there is more steam in the rally.

After the recent India-China standoff, the