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News Topical, Digital Desk : Brokerage firm Motilal Oswal has issued a positive view on the Indian defense sector. The brokerage believes that ongoing tensions in West Asia could lead to increased defense spending worldwide. In such an environment, Indian defense companies could find domestic orders as well as export opportunities. Consequently, the brokerage has maintained a Buy rating on the stocks of four defense companies and forecasts a 15% to 38% upside potential.
According to the brokerage, the Indian government's emphasis on self-reliant defense production (indigenization) and India's growing credibility in the global market could benefit the sector. However, the brokerage also noted that some projects may face supply chain challenges in the future, particularly due to the need for specialized components and imported systems.
Bharat Electronics (BEL) Motilal Oswal has given a Buy call on Bharat Electronics with a target price of ₹520, which is approximately 14% upside from current levels. The company has significant opportunities from projects like the LCA Mk-1A system, Shatrughat EW, and next-generation corvettes. Additionally, orders worth approximately ₹30,000 crore from QRSAM are expected.
Hindustan Aeronautics (HAL) The brokerage has also given a Buy rating on HAL and has a target price of ₹5,500, indicating a potential upside of approximately 38% for the stock. The company may soon begin deliveries of the Tejas Mk-1A. Additionally, it has orders for projects like the Dornier-228, Dhruv-NG, and ALH Mk-III.
Bharat Dynamics (BDL) According to Motilal Oswal, Bharat Dynamics could secure new orders worth approximately ₹20,000 crore in the next 18 months. The company has an order pipeline of approximately ₹50,000 crore. The brokerage has given a target of ₹1,800 for this stock, which is approximately 35% upside from the current level.
Astra Microwave The brokerage has also given a Buy rating to Astra Microwave. The company can get big opportunities in QRSAM and electronic warfare related projects, which are said to have a long-term potential of up to ₹25,000 crore. The brokerage has set a target price of ₹1,150 for this stock, which is expected to give an upside of approximately 15%. Overall, the brokerage believes that large orders in the defense sector are likely to be finalized in the next 15–18 months, which could provide strong support to the earnings and growth of these companies.
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