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With zero debt and comfortable working capital position, Bharat Electronics is well-placed to benefit from the defence opportunity, Jefferies said. Global OEM tie-ups not giving a material benefit is seen as a key risk for the HAL stock.
India's domestic defence expenditure is expected to double from FY24E-30E, shaping the sector significantly. Jefferies forecasts a 13% industry CAGR from FY23 to FY30, with an estimated domestic defence opportunity of USD 100-120 billion. The focus on indigenization and export defence opportunities suggests robust growth potential. Leading players like Data Patterns and HAL are poised for significant revenue growth, endorsed with Buy ratings.
Manav Chopra, from Nuvama Institutional Equities, foresees bullish trends in metals, defence, power, and mid-tier PSU banks. Bank Nifty support levels, IT sector basing out, and strong performances in Karur Vysya Bank, BSE, and metals sector are notable. Chopra further says: "It seems the bull market is here to stay and eventually , we expect the midcap 100 to rally towards sub-58,000 levels and for the smallcaps, we have a target of close to 18,000 levels."
Top brokerage firms like Citigroup, CLSA, Macquarie, and Jefferies provide buy ratings and target prices for Adani Ports, D-Mart, AB Capital, and BEL.
Stocks of most large defence players have seen rapid gains over last five years. For example, HAL has gained over 9x, BEL has gained around 6x and Data Patterns has gained nearly 3x (over the last three years; listed in 2021).