Bharat Electronics, L&T Get Nomura's 'Buy' As Defence Council Clears Rs 1.05 Lakh-Crore Indigenous Proposals

Nomura's latest note on India defence shows positives for indigenous manufacturers and Indian defence shipyards. This comes as the Defence Acquisition Council accorded Acceptance of Necessity for 10 capital acquisition proposals through indigenous sourcing, amounting to nearly Rs 1.05 lakh crore, on July 3. The firm has initiated coverage on Bharat Electronics and L&T with a 'buy' rating.

Nomura's interaction with industry experts suggests that the DAC has approved AoN for Quick Reaction Surface to Air Missiles or QRSAM, which is estimated at Rs 30,000 crore. Given the urgent requirement of this system especially post aftermath of ‘Operation Sindoor’, the MoD may conclude cost negotiations and approval from Cabinet Committee on Security within 6-8 months.

QRSAM is a compact, highly mobile air defence system mounted on 8x8 truck, offering 360-degree defensive coverage.

The brokerage has initiated a 'buy' rating for Bharat Electronics Ltd., as probability of receiving contract for Quick Reaction Surface to Air Missiles on nomination basis by end-CY25 has increased.

"We have built QRSAM order in BHE’s FY27 order inflow," it added.

Nomura also initiated coverage on Larsen & Toubro Ltd. with a 'buy' rating, as the company has developed the system's transporter erector launcher.

The brokerage is positive on Indian defence shipyards as DAC has revived MCMV program again and given an approval to build 12 mine countermeasure vessels, which we estimate at Rs 44,000 crore. To effectively secure India's extensive coastline, the Navy requires a minimum of 24 MCMVs, the brokerage noted.

"This will be followed by issuing the request for proposal, which is the formal tender, to the Indian shipyards for their techno-commercial bids for the acquisition. The rolling out of the first vessel is expected after seven to eight years of signing the contract," it said.