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Nirmal Bang Report
Nirmal Bang remains broadly constructive on the defence sector, however, it has moderately cut earnings estimates, target prices, and valuation multiples factoring in recent market corrections and near-term risks.
The brokerage highlighted that defence stocks have declined ~10–20% over the past month, reflecting valuation normalisation and broader market weakness despite elevated geopolitical tensions.
According to Nirmal Bang the ongoing Iran–Israel conflict adds uncertainty, particularly on the supply chain front with potential disruptions in key routes like the Strait of Hormuz, rising energy prices, and shortages of critical inputs impacting global defence manufacturing. This is already translating into delays in component supplies and higher input costs.
Additionally elevated oil prices may further dent margins via higher logistics and input costs.
While geopolitics remains a long-term positive for defence spending, Nirmal Bang noted that the near-term impact is mixed, with execution risks and cost pressures weighing on earnings visibility.
Overall, the brokerage believes that the long-term story remains intact, near-term headwinds warrant a more calibrated stance on estimates and valuations.
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