The eyes of the world are currently focused on the Middle East. The ever-increasing geopolitical tension between America and Iran has changed the equations of global markets. Whenever there is instability on the borders, defense budgets and demand for military equipment increases across the world. Its direct effect is also visible in the Indian stock market. The shares of the defense sector, which were silent for some time, have now become active again. It is important for common investors to understand which companies’ shares can strengthen their portfolio in this period of global crisis. In this series, the famous brokerage firm ‘Choice Institutional Equities’ has released its report on 4 major companies of defense and aerospace sector.
1. Bharat Electronics Limited (BEL)
According to the brokerage firm, BEL is no longer just a small component maker, but is leading large system-level projects. The company currently has a huge order book of Rs 73,500 crore, which ensures strong earnings for the next three years. The company is working on important defense programs like ‘Project Kusha’ and ‘Quick Reaction Surface to Air Missile’ (QRSAM). Experts have set a target of Rs 550 for this share with its current price of Rs 453. Additionally, investors are also expected to get a dividend yield of 1.1%.
2. Hindustan Aeronautics Limited (HAL)
The market sentiment regarding HAL is quite positive. The concerns that were there some time ago regarding the supply of engines for Tejas Mk-1A fighter planes now seem to be resolved. Due to strong defense ties with the US, deliveries of GE-F404 engines have resumed. 54 percent of the order of this company is related to upgrade and engine manufacturing of Sukhoi-30MKI. The company’s order book is 7.9 times larger than its annual income. The brokerage has set a target of Rs 4780 for this, which can give a dividend yield of 1.2% to the investors.
3. Centum Electronics
The third name in this list is Centum Electronics, which has been given a ‘Buy’ rating. This midcap company is now rapidly moving towards mission-critical defense and space electronics. The increasing participation of this company in various space programs of ISRO makes it a strong and safe investment. In view of the strong quarterly results, experts have set a target of Rs 3000 for its shares.
4. Data Patterns
Data Pattern has created its own identity in the market. This company is focusing on its own design capability and intellectual property (IP) instead of relying on others. The company is doing excellent work in complex areas like seeker and radar of BrahMos missile. They take up only those projects where they have their own design, due to which their profit margin remains safe. The brokerage has set a target of Rs 3600 for this share with its current price of Rs 3,332.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.