Defence stocks to buy: HAL, BEL shares gain over 2% as Nomura initiates coverage, sees up to 30% upside
Also Read: Breakout stocks today: Sumeet Bagadia recommends five stocks to buy today The brokerage firm also expects the momentum in India’s defence exports to continue averaging to ₹300 billion annually over FY24-32F. Nomura has initiated coverage on HAL shares and BEL shares with a ‘Buy’ rating and expects an upside potential of up to 23% - 30%. Nomura initiates coverage on the stock with a ‘Buy’ rating and HAL share price target of ₹4,750 apiece, valuing HAL shares at 38x FY26 earnings.
Hindustan Aeronautics has seen a sharp re-rating since June 2023, with 1-year forward PE shifting to 22x-42x from 16x-22x, primarily due to MoU with GE for F414 fighter jet engine, and Approval of Necessity (AoN) for LCA Mk1A, LCH, and upgrades of Su-30 MKI, Nomura said. It sees potential for re-rating as the value opportunity of ₹3.9 trillion over the next eight years provides growth visibility. Subsequently, Nomura believes its valuation would sustain at the higher end of 22x -42x 1-year forward PE.
It expects revenue, EBITDA, and PAT to register respective CAGRs of 14%, 11%, 23% over FY23-26F. Also Read: TVS Motor share price climbs over 4% after Q4 result; should you buy? Here's what experts say Bharat Electronics is poised to demonstrate revenue, EBITDA, and PAT CAGRs of 16%, 18%, and 22%, respectively, over FY23-FY26F, underpinned by a strong order backlog of ₹760 billion (3.86x TTM sales), bolstered by a robust order pipeline. We expect the company to sustain secular growth, driven by market dominance and increased project sizes as it further ascends the value chain as a system integrator, Nomura said.
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