BEL: Jefferies: Defence Stocks Surge on Local Manufacturing and Geopolitical Boost
The Jefferies Brokerage Firm said Indian Defence companies set to grow by $7 billion worth in FY2024-2030. 17% Annual growth from FY 2017-2024 shows $3 billion growth in Indian Defence department. India is supplying more military devices to neighbouring countries and used for Domestic use also.
BHARAT ELECTRONICS Market Price is moving in Ascending channel and market has reached higher high area of the channel
In a recent note, analysts at Jefferies highlighted that the stocks of defense companies are experiencing a notable uptrend, propelled by heightened geopolitical tensions and India’s sustained emphasis on self-reliance, which are bolstering order flows and driving a surge in revenue.
Jefferies has commenced coverage on Hindustan Aeronautics (HAL) and Data Patterns with a ‘buy’ recommendation, while maintaining the same rating for Bharat Electronics (BEL). The brokerage suggests that in the defense sector, the government’s efforts to strengthen bilateral relations to boost exports are further enhancing the industry’s prospects. Moreover, the doubling of domestic defense spending from FY2024 to FY2030 is anticipated to sustain the upward trajectory of stocks. Jefferies predicts that India’s capital defense expenditure will maintain a 7-8 percent Compound Annual Growth Rate (CAGR), while a focus on indigenization will drive double-digit growth in domestic defense spending.
Furthermore, the report identifies exports as a significant area of opportunity for the segment. It estimates that defense exports could grow by an average of 21 percent in FY23-30, reaching $7 billion by FY30 from $3 billion in FY24. The brokerage foresees export opportunities emerging from countries such as the UAE, Bhutan, Ethiopia, Italy, and Egypt, aligning with the government’s target of achieving $6 billion in defense exports by FY2029.
In terms of individual companies, Jefferies projects robust growth prospects for Data Patterns, estimating a nearly fivefold increase in revenues from FY24 to FY2030. This growth is expected to be driven by heightened focus on indigenization and a strong export pipeline. BEL, with its zero debt and comfortable working capital position, is well-positioned to capitalize on growth opportunities in the sector. For HAL, the recent collaborations signal potential advancements in its Original Equipment Manufacturer (OEM) status among global defense companies. Additionally, HAL’s revenue structure, with a significant portion linked to service income from past product sales, is expected to benefit from the government’s push for domestic aircraft manufacturing.
UFlex company has started its Commissioning CPP Film in Russian Step down subsidiary plant for manufacturing 18000MT per Year on April 01, 2024. Already the company achieved the 168000MTPA in Panipet Haryana Plant in March 2024. It is extended production in Russian Plant.
UFLEX Market Price is moving in Ascending channel and market has reached higher low area of the channel
In the opening trade on April 2, Uflex’s share price surged by 6% after the company inaugurated a CPP film production line at its Russian subsidiary, Flex Films Rus LLC.
The new production line in Russia has an annual capacity of 18,000 metric tons and commenced operations on April 1. Additionally, on March 31, Uflex achieved the start of commercial production at its manufacturing facility in Panipat, Haryana, with an installed capacity of 168,000 metric tons per annum. This facility will produce Poly Condensed Polyester Chips, serving as raw material for BOPET packaging films and catering to third-party customers.
Bharat Dynamics: Bharat Dynamics Dips as FY24 Turnover Slides by 5.6%
The Bharat Dynamics reported Rs.2350Cr Volume done in FY 2023-2024 compared to Rs.2489.4Cr in Previous year. Nearly 5.6 volume decline in this company. The Company side said due to supply chain problems in Europe and middle east, the volume has declined this year. Rs.19468 Cr Order Book is having in our company so far.
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Bharat Dynamics Slips as FY24 Turnover Dips by 5.6%
Bharat Dynamics shares saw a nearly 1 percent drop at the NSE opening on April 2, following the company’s announcement of a 5.6 percent decline in its turnover.
In an exchange filing after market hours on April 1, Bharat Dynamics reported a turnover of Rs 2,350 crore for the financial year ending March 2024, marking a 5.6 percent decrease from Rs 2,489.4 crore the previous fiscal year. The company attributed the decline to the current geopolitical situation in Europe and the Middle East, which has impacted its supply chain. Additionally, Bharat Dynamics disclosed an order book of Rs 19,468 crore for FY2024.
During Q3, Bharat Dynamics reported a consolidated net profit of Rs 135 crore for the quarter ending December 2023, marking a 61 percent year-on-year (YoY) increase from Rs 84 crore recorded in the previous fiscal year. Consolidated revenue from operations also grew by 30 percent YoY to Rs 602 crore for the same period. EBITDA for the reporting period increased by 32 percent to Rs 119 crore, compared to Rs 90 crore in the previous fiscal year.
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