The defence sector is a key beneficiary of the Make-in-India and Atmanirbhar Bharat policy as self-sufficiency is a key focus now for government of India. To add to it, China +1 strategy works in favor of Indian defence equipment makers. Indian PSUs have been working on developing efficiencies and executions, which is reflected in the large executed order books of these players.

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But not just domestic demand, exports also are a huge driver for the industry. For instance, Hindustan Aeronautics and Bharat Electronics have a large order book position.

In a recent interview with CNBC-TV18, Amit Anwani, Research Analyst at Prabhudas Lilladher, shared his positive outlook on Bharat Electronics Ltd (BEL) and Hindustan Aeronautics Limited (HAL).

“We are positive on BEL. The stock has rallied a lot and it's trading at roughly about 22-23x forward, but having said that, because of sustainability and BEL is largely beneficiary when any order comes into any services including aircraft, submarine because of the defense electronics and we are seeing a lot of sustainability with respect to performance, order intake and at the same time margins, so we can expect some rerating,” he said.

Anwani highlighted the potential growth and sustainability factors that contribute to his bullish stance on these companies. He also emphasized the importance of technology transfer and robust order books in ensuring long-term success.

Amit Anwani expressed optimism regarding Bharat Electronics, a leading defense electronics company in India. He believes that the company has strong growth potential going forward. Despite challenges faced by the defense sector, Anwani is confident in Bharat Electronics' ability to sustain its revenue growth. The company's track record and expertise in defense electronics manufacturing positions it favorably for future contracts and collaborations.

Anwani also highlighted Hindustan Aeronautics Limited (HAL), a key player in the aerospace industry. He believes that HAL has the potential to play out well in the longer term. With a robust order book and a focus on technology transfer, HAL is well-positioned to capitalize on the evolving aerospace market. Anwani's positive sentiment toward HAL stems from the company's ability to adapt and meet the increasing demand for advanced aircraft and related services.

In addition to HAL, Anwani expects long-term growth for Mazagon Dockship. He predicted double-digit growth for both HAL and Mazagon Dockship in the coming years. This projection is based on their strategic positioning in their respective industries, as well as the anticipated rise in demand for their products and services. The sustained growth in these sectors will contribute to the overall progress of the companies in the long run.

Anwani emphasized the importance of revenue sustainability for both Bharat Electronics and HAL. Despite fluctuations in the defense and aerospace industries, these companies have managed to sustain their revenue growth. Anwani attributes this to their strong market presence, solid track record, and consistent performance. Their ability to secure contracts and partnerships, as well as their focus on research and development, will ensure a steady stream of revenue in the future.

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(Edited by : C H Unnikrishnan)