ICICI Securities: Although the share prices of Astra Microwave Products, Azad Engineering, and Solar Industries India have increased by 100–134% in the past year, ICICI Securities analysts predict more gains. Strong order flows in the last few months have greatly benefited the Defense Public Sector undertakings, and further orders are anticipated.
Positive effects are expected to trickle down to private sector manufacturers like Astra Microwave Products, Azad Engineering, and Solar Industries India as they benefit Defence Sector PSUs like Hindustan Aeronautics.
Increases of up to 24% predicted
According to Mint, ICICI Securities analysts anticipate that there is still more life in defence equities due to several significant orders anticipated for FY25, notwithstanding the great returns observed in FY24.
Furthermore, the application of the LCA Tejas Mk-1A would be advantageous to the national aerospace ecosystem. Given this, analysts at ICICI Securities believe that orders from Defense PSUs will likely reach private companies operating in the defence industry more swiftly due to the Indian government’s persistent desire for indigenization.
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With a target price of RS 10,950, ICICI Securities has recommended Solar Industries, implying a 24% increase from the current stock price of around ₹8830.
While Azad Engineering’s goal price of ₹1600 shows an upside of over 17% from current levels of stock trading near ₹1364 levels, Astra Microwave’s target price of ₹800 implies an upside of more than 14% from current levels of around ₹700.
According to ICICI Securities, the fourth quarter is usually a good one for the companies they cover.
With excellent execution, average revenue growth of 15% YoY is anticipated. It is expected that the companies will record strong order intake. Furthermore, analysts note that private companies have been receiving strong export orders, and they anticipate that margins will increase gradually for all businesses—apart from shipbuilders—over time.
Orders worth ₹6000 Crore were placed with Bharat Electronics Ltd (BEL) across multiple platforms and services, while Hindustan Aeronautics received orders totaling ₹17560 Crore. Mazagon Dock Shipbuilders A received an order for fourteen swift patrol boats.
However, according to ICICI Securities, Solar Industries has won two export contracts for ₹4440 Crore, which are expected to be completed in three years. This is expected to boost the company’s defense revenue significantly. According to ICICI Securities, Dynamatic Technologies and Azad Engineering were among the major aerospace order recipients from worldwide OEMs (Original Equipment Manufacturers). These order volumes should maintain strong execution for these businesses.
