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.
"The total value of the projects amounted to nearly Rs 1.05 trillion and the said AoNs were accorded under the Buy – Indian Indigenously Designed Developed and Manufactured or IDDM category to provide further impetus to indigenous design and development," the note said.
DAC has approved AoN for Quick Reaction Surface to Air Missiles and revives MCMV program again—positive for Indian defence shipyards.
This approval covers the procurement of the following key projects:
Surface-to-Air missiles.
Armoured Recovery Vehicles.
Electronic Warfare System.
Integrated Common Inventory Management System for the Tri-Services.
Moored Mines.
Mine Counter Measure Vessels.
Super Rapid Gun Mount.
Submersible Autonomous Vessels.
These procurements will provide enhanced mobility, effective air defence, improved supply chain management while also augmenting the operational preparedness of the armed forces, as per the Ministry of Defence.
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.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
