The Indian government’s Atmanirbhar Bharat vision in the defence sector will benefit domestic companies, said Harshit Kapadia, Vice President, Industrials, Consumer Durables & Electricals, & Renewables at Elara Capital on Tuesday. Kapadia expects the revenues of the Indian companies operating in the defence sector to earn revenues to the tune of $25 billion by 2025, including $5B from the export of aerospace and defence products and services.
Among defence stocks, Kapadia prefers Hindustan Aeronautics Ltd (HAL) among largecaps and Bharat Dynamics and Garden Reach Shipbuilders & Engineers Ltd (GRSE) in the midcaps pack.
“We prefer HAL because there could be much more surprise in terms of export is what we see. On the smallcaps and midcaps like Garden Reach Shipbuilders & Engineers Ltd (GRSE) and Bharat Dynamics is what we look at,” Kapadia told CNBC-TV18.
He said that smallcap and midcap defense private companies looks to be the biggest beneficiary when it comes to indigenisation.
“The surprise element could be in terms of defense export, because government is pushing a lot in terms of exports per se.”
In smallcap and midcap side, Kapadia named Data Patterns (India) Ltd, Paras Defence And Space, Astra Microwave Products Ltd and Dynamatic Technologies. He said that the product portfolio is aligned to indigenisation – one of the key focus of the government.
According to Kapadia, downside in Data Patterns is a good opportunity to buy given there is going to be an increase in order inflows for the company. He adds that the projects which they have undertaken with the government are now coming from development board to production.
On MTAR Tech, he said that there was a concern, but now the company is better off compared to around six months back.
“Right now we are seeing more things getting cleaner, they are adding more opportunities, they have recently mentioned in the call that they are looking at space as another opportunity. They are further expanding their scope of work in each of these segments where they are operating. So there is more juice to be taken from the company.”