Defence Stocks Benefit as DAC Clears ₹2.38 Lakh Crore Deals
Defence Stocks Surge Following Ministerial Approval
₹2.38 lakh crore in defence agreements approved by Defence Minister Rajnath Singh has led to a surge in defence stocks on March 30. Key players in the sector, including Garden Reach Shipbuilders & Engineers, Astra Microwave Products, Cochin Shipyard, Paras Defence and Space Technologies, and Bharat Dynamics, saw gains ranging from 1% to 4%.
The approval marks a significant development in the defence space, with the total clearances in the current fiscal year reaching an all-time high of ₹6.73 lakh crore (excluding the ₹3.25 lakh crore Rafale acceptance of necessity amount). This figure is more than three times greater than last year's total of ₹2.2 lakh crore.
Key Stocks to Benefit
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- Bharat Electronics (BEL) and Hindustan Aeronautics (HAL) are expected to outperform once the broader market strength resumes, according to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One.
- Motilal Oswal Financial Services maintains an optimistic outlook on the defence sector, with Bharat Electronics being their preferred choice within their coverage universe.
- The brokerage has retained a "Buy" rating on Bharat Heavy Electricals Ltd (BHEL), Hindustan Aeronautics Ltd (HAL), Bharat Dynamics Ltd (BDL), and Astra Microwave Products Ltd (AMPL), with target prices ranging from ₹520 to ₹1,150.
Analyst Ratings
- Motilal Oswal Financial Services:
- Bharat Heavy Electricals Ltd (BHEL): Buy, target price ₹520
- Hindustan Aeronautics Ltd (HAL): Buy, target price ₹5,500
- Bharat Dynamics Ltd (BDL): Buy, target price ₹1,800
- Astra Microwave Products Ltd (AMPL): Buy, target price ₹1,150
- Zen Technologies Ltd (ZEN): Neutral, target price ₹1,400
- B&K Research:
- Hindustan Aeronautics Ltd (HAL): Buy, target price ₹5,467
- Bharat Electronics Ltd: Buy, target price ₹513
- Bharat Dynamics Ltd: Hold, target price ₹1,278
Investor Takeaway
Investors should be cautious of the defence sector's performance until there are clear signs of reversal or a decisive close above the 20 DEMA.
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