Top defense stocks to bet on amid India’s self-reliance in defense manufacturing

The third Positive Indigenization List (PIL), the sixth PIL for Defense Assets, further attests to the Department of Defense’s continued pursuit of self-sufficiency in defense manufacturing, as well as the minimization imports and development of small and medium-sized private defense companies, analysts at brokerage Elara said. Capital in note.

They remain positive about the indigenization story and are encouraged by rising exports. The brokerage believes that small and mid-sized private defense stocks such as Data Patterns, MTAR Technologies, Paras Defence, Astra Microwave, Dynamatic Technologies, Taneja Aerospace, etc. would probably be the main beneficiaries.

The Ministry of Defense (MoD) approved the sixth Positive Indigenization List (PIL) of 780 items, comprising Line Replacement Units (LRUs)/Subsystems/Components, on 28 August 2022. This milestone will further reduce defense imports.

Local development of these LRUs/subsystems/components will strengthen the economy and reduce dependence of DPSUs on imports. Furthermore, it will help harness the design capabilities of the national defense industry and position India as a design leader in these technologies, the ministry said in a statement.

The list includes 360 items from Hindustan Aeronautics (HAL), 134 items from Mazagon Dockyard, 111 items from BEML, 69 items from Bharat Electronics (BEL), three items from Garden Reach Shipbuilders & Engineers, two items from Bharat Dynamics (BDL) and 101 items from other unlisted DPSUs. The indigenization timeline runs from December 2023 to 28 and Elara expects domestic private small and medium enterprises to be the main beneficiaries.

The brokerage has a buy tag on Garden Reach Shipbuilders & Engineers with a target price of 400. Considering that it has accumulated ratings on shares of Hindustan Aeronautics and Bharat Dynamics with target prices of 2,650 and 960 respectively and reduced recommendations on Bharat Electronics (TP: 305) and BEML (TP: 1,865).

The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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