Defence Sector Check - Optimism In Sight: ICICI Securities

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ICICI Securities Report

We believe the two recent back-to-back developments:

Cabinet Committee of Security’s approval for AL-31FP order; and
Acceptance of Necessity worth Rs 1.45 trillion for 10 platforms allay concerns that the street might have regarding the lack of orders for defence sector.

Additionally, the high level of indigenisation content implies attractive opportunities for players in domestic defence ecosystem. We await further developments pertaining to progress on Pinaka and Medium Range Surface to Air Missiles orders, that are pending for some time now.

We maintain Solar Industries India Ltd. (target price: Rs 13,250) and Azad Engineering (target price: Rs 2,450)- both Buys- as our top picks in the space.

Among defence public sector undertakings, we believe Bharat Electronics Ltd. (target price: Rs 350; Add) can benefit due to the trickle-down effect from these orders.

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ICICI Securities Defence AON Update Sept.pdf

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Also Read: India Strategy - ‘Stock Melt-Up’ Reduces Forward Equity Return Prospects: ICICI Securities

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