Multibagger Defence Stocks Astra Microwave, Azad Engg, Solar Ind are ICICI Securities 3 top picks, ahead of Q4 results

Astra Microwave Products, Azad Engineering , Solar Industries India share price while have risen 100-134% during last one year, more gains are expected as per analysts at ICICI Securities.  The Defence Public Sector undertakings have benefitted immensely from strong order flows in the recent past and more orders are expected to fall in. As Defence Sector PSUs as Hindustan Aeronautics and others benefit, the positives are likely to percolate to private sector manufacturers as Astra Microwave Products, Azad Engineering , Solar Industries India.

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Strong gains of up to 24% expected 

Despite the strong returns seen in FY24 analysts at ICICI Securities expect that there is still more life in the defense equities because there are a number of large orders scheduled for FY25. 

In addition, the domestic aerospace ecosystem would benefit from the implementation of LCA Tejas Mk-1A. In light of this, analysts at ICICI Securities think that the Indian government’s continuous push for indigenization will probably cause orders from Defence PSUs to reach private firms working in the defense industry more quickly.

ICICI Securities has recommend Solar Industries with at target price of RS 10,950, indicating 24% upside from current stock prices at close to ₹8830. 

Astra Microwave target price at ₹800, indicates an upside of more than 14% from current levels of around ₹700 , While Azad Engineering target price at ₹1600 indicates upside of around 17% frm current levels of stock trading near ₹1364 levels. 

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Traditionally strong Q4 to see see strong order flows too

The Q4 remains traditionally is a strong quarter and ICICI Securities  expect companies under their coverage to fare well . 

The expect average revenue growth at 15% YoY aided by strong execution.  The companies are expected to report good order inflows.  In addition  private companies have received good export orders highlight analysts and they expect margin to expand sequentially across all the companies, except shipbuilders.

While Bharat Electronics Ltd (BEL)  received orders worth ₹6000 Crore spread over various platforms and services, Hindustan Aeronautics  orders inflows stood at ₹17560 Crore. Mazagon Dock Shipbuilders  A received  order for 14 fast Patrol vessels.

However  Solar Industries has received two export orders worth ₹4440 Crore to be executed within three years and this as per ICICI Securities is likely to give a significant thrust to defence revenue for the company. On the aerospace front, both Dynamatic Technologies and Azad Engineering stood among significant order recipients from global OEMs (Original Equipment Manufacturers), highlighted ICICI Securities. These order flows are likely to keep execution at these companies robust.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

Defence Stocks that have given multibagger returns are likely to report good performance for quarter ending MArch’2024.per

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Published: 29 Apr 2024, 05:29 PM IST