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Motilal Oswal Report
The Indian defence sector received another growth trigger after the Defence Acquisition Council (DAC) approved Acceptance of Necessity (AoN) proposals worth about Rs 52,000 crore for the Army, Navy and Air Force.
According to the domestic brokerage Motilal Oswal, these AoN approvals, coupled with those granted over the last two years, to increase the overall addressable market for domestic players and enhance order inflow visibility. Along with this, the fast-track procurement procedure facilitates procurements exceeding Rs 1.3 trillion across drones, electronic warfare systems, and SDRs, with decisions to be made in 6-12 months
Domestic brokerage firm Motilal Oswal believes the latest approvals, coupled with the government's fast-track procurement initiatives, could significantly improve order inflow visibility for domestic defence companies.
In its latest sector update, the brokerage maintained a positive stance on the defence space and reiterated Bharat Electronics Ltd. as its top pick.
On the stock-specific front, the brokerage reiterated its Buy rating on Bharat Electronics with a target price of Rs 510 and maintained a Buy on Hindustan Aeronautics Ltd.with a target price of Rs 5,500.
It also retained a Buy recommendation on Astra Microwave Products with a target price of Rs 1,715. Meanwhile, Bharat Dynamics and Zen Technologies continued to carry Neutral ratings with target prices of Rs 1,250 and Rs 1,600, respectively.
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