Defence stocks customs duty exemption on imports: Defence stocks, including Bharat Dynamics (BDL), Bharat Electronics (BEL), Hindustan Aeronautics (HAL), and others, saw a little increase on June 28 following the government’s decision to extend the exemption from customs duty on the importation of specific parts.
According to report, extended for five years until 2029, the exemption that was set to expire on July 1st now covers military helicopters with empty weights over 3,500 kg, as well as associated role equipment, ground support equipment, ground handling equipment, and other categories.
The Modi government has underlined the defense sector strongly by raising finance, expanding defense expenditures, and raising defense exports. Investors have been pouring money into the market expecting policies to stay the same and that economic developments will keep on.
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To secure borders, Finance Minister Nirmala Sitharaman suggested in the 2019 Union Budget that defense equipment not made in India be free from customs duties.
The optimism surrounding public sector undertakings (PSUs) and the likelihood of getting further orders in the medium to long term have led to a notable increase in interest in defence stocks.
Early this month, minister of defense Rajnath Singh set a target for India’s defense exports to reach Rs 50,000 crore by 2029. The country’s defense export income in FY24 came to a historic Rs 21,083 crore.
Anand Rathi Shares and Stock Brokers has projected that by 2029, the Indian market for aerospace and defense products will reach a value of $11.8 billion. It stated that the private sector’s contribution to defense production has now reached a record eight-year high of 22%.
The brokerage identified shipbuilders Mazagon Dock, Garden Reach, and Cochin Shipyard as the major participants for the Indian Navy, and Bharat Dynamics, BEML, and Mishra Dhatu Nigam (MIDHANI) as the major players for the Army.
In early trade on June 28, shares of HAL, BEL, and BDL were up more than 1%. The equities of BEML and Paras Defence were also rising in value. Gains of up to 3 percent were seen in the shipping stocks as well.
Over the last 12 months, the majority of Indian defense businesses’ shares have increased by 50–100% or more, outpacing the benchmark Nifty 50, which increased by about 27% during this time.
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As per Antique Stock Broking, the government’s groundbreaking efforts to create a strong domestic defense ecosystem have resulted in notable changes in the Indian defense sector throughout the last four years.
Through several programs, the Ministry of Defence (MoD) is committed to promoting this environment.
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The firm updated its target prices for defense equities in anticipation of strong growth: BEL’s target price climbed to Rs 339 from Rs 308, maintaining a “buy” rating; HAL’s target price grew to Rs 6,145 from Rs 5,462, continuing to be rated as a “buy.”
Mazagon Dock Shipbuilders was rated as a “buy,” with the target price being changed from Rs 2,833 to Rs 3,458. The rating for BEML was upgraded to “buy,” and the target price was increased from Rs 3,510 to Rs 5,216.
