European Defence: The European Union (EU) is pushing a plan called “Re-arm Europe,” which could create a big opportunity for defence companies. With tensions rising around the world and European countries needing to restock their weapons and ammunition, experts think this demand could last for the next 56 years.
ICICI Securities, a financial firm, says that companies with supply deals, partnerships, or orders from European firms are likely to gain the most. They have named four Indian companies that could benefit: Solar Industries India Ltd, PTC Industries Ltd, Dynamatic Technologies Ltd, and Azad Engineering.
“We expect Solar Industries (Buy; target: Rs 13,720), PTC Industries (Buy; target: Rs 20,070), Dynamatic Technologies (Buy; target: Rs 9,330) and Azad Engineering (Buy; target: Rs 2,350) to likely be the key beneficiaries of such a policy. While the TPs for other stocks remain unchanged, we have revised the target for Azad Engineering, adjusting for the recent QIP issue,” ICICI Securities said, reported by Business Today.
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Solar Industries
Solar Industries has been winning big orders for ammunition exports recently. Its current defence order book is worth Rs 13,000 crore, with 45-50% of these orders coming from exports over the next 3-7 years.
The company is also in a good position to help with a global shortage of TNT, a key material used in explosives. ICICI Securities says Solar Industries is well-placed to meet this demand.
Solar Industries has also made progress in exporting Pinaka rocket systems. Three years ago, it won an order worth Rs 300 crore for these systems. Since the EU is focusing on rocket systems, this could open more opportunities for the company. France has already shown interest in the Pinaka system. Additionally, Solar Industries has developed a counter-drone system called Bhargavastra, which has been tested by the Indian armed forces. If the EU shows interest in this technology, it could lead to more growth for the company.
PTC Industries
PTC Industries is already part of the global supply chain for major European defence companies. It has received orders for titanium castings from several European firms.
The company is in talks with Airbus, Rolls Royce, and Pratt & Whitney (P&W) for more orders in titanium and superalloy castings. PTC could also become a supplier of titanium metal for European defence companies. Recently, it set up India’s largest titanium VAR capacity of 1,500 tonnes per year.
PTC is also working on new facilities, including Electron Beam Cold Hearth Remelting (EBCHR) capacity of 5,000 tonnes per year and Plasma Arc Melting (PAM) capacity of 200 tonnes per year. Once these are ready, the company expects to get more orders.
Recently, PTC bought Trac Precision Solutions, a company that specialises in machining complex cooling passages in castings. This gives PTC an edge over competitors, as it can now offer a single-window solution to customers. ICICI Securities expects firm orders for PTC’s metal capacities to come in the next 1-1.5 years.
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Dynamatic Technologies
The conflict in Europe has helped Dynamatic Technologies grow in the aerospace and defence sectors. In the third quarter of FY25, the company successfully developed prototype defence products and is now waiting for orders from Western European customers.
One of its key assets is Eisenwerk Erla GmbH, a foundry in Germany that could become a major supplier of artillery shell casings and aerospace castings.
Dynamatic Technologies already works with big aerospace firms like Airbus, Dassault, Bell, and Deutsche Aerospace. While these contracts are mainly for commercial aviation, ICICI Securities says the company could also enter defence programs in the future.
Azad Engineering
Azad Engineering has seen a huge jump in its order book, which went from Rs 1,700 crore to Rs 6,500 crore in just one year. While most of its orders come from the power and oil & gas sectors, the company has made big strides in defence manufacturing, especially with Rolls Royce.
Because of its cost competitiveness, Azad Engineering is expected to win more orders for airfoils and aerospace components. As European defence firms look for reliable and cost-effective suppliers, Azad Engineering could secure more contracts in the future.
