Defence stocks to buy: Nomura initiates coverage on HAL, BEL, sees up to 30% upside move

Defence stocks to buy, Nomura on defence sector: Global brokerage Nomura initiated coverage on Hindustan Aeronautics (HUL) and Bharat Electronic (BEL) with a buy call, as the brokerage is bullish on the country's defence space. BEL and HAL are state-run companies, engaged in the aerospace and defence industry.

Nomura believes the country's defence sector is witnessing a significant growth driven by increasing defence budgets, modernization efforts, and the government's emphasis on indigenous manufacturing through initiatives like “Make in India."

According to a recently released report, the global brokerage foresees a $138 billion opportunity in the defense sector over FY24 to FY32. The brokerage stated that there could be further legs in the upcycle, as the government is following through on all defense-related policies.

HAL share price target

Nomura initiated coverage on HAL with a buy rating with a target of Rs 4,750 for its strong moat in fighter aircraft and helicopters, and significant capability upgrade that provides basis for the development of an indigenous engine program. The target implies an upside potential of over 23 per cent from the previous close. 

The analysts at Nomura see a potential for re-rating in HAL as the value opportunity of Rs 3.9 trillion over the next eight years provides growth visibility.

BEL share price target

Nomura initiated coverage on BEL too, with a buy rating for its increased visibility on order inflows, conviction on margins delivery and expansion in returns ratios. The brokerage has placed the target at Rs 300, implying an upside potential of nearly 30 per cent from the previous close. 

Nomura anticipates that BEL’s premium valuations will endure, supported by enhanced visibility on the platform side, healthy return ratios, and a resilient margin profile.

For all other news related to business, politics, tech and auto, visit Zeebiz.com.