Chandrayaan-3 Boost: 9 Space-Related Stocks Hit New 52-Week Highs; What Should Investors Do Ahead?

Defense stocks are the star of the day, thanks to the smooth landing of Chandrayaan-3, On Thursday, the majority of space-related stocks hit fresh 52-week highs including L&T, MTAR, Midhani, Hindustan Aeronautics and Avantel among others. Some of these stocks have made investors rich with double-digit returns in a span of one week. After the success of Chandrayaan-3, experts are optimistic about these stocks, and some brokerages have recommended buying too owing to their strong order book in defense segment.

India's Chandrayaanb-3 has successfully and smoothly landed on the lunar south pole, becoming the first country to achieve this milestone globally. Also, India became the fourth country in the world to touch the moon after the United States, Russia, and China. The Rs 250 crore Chandrayaan mission's primary objectives are threefold, (a) to demonstrate a Safe and Soft Landing on the Lunar Surface; (b) to demonstrate Rover roving on the moon, and (c) to conduct in-situ scientific experiments, as per the Department of Space. Chandrayaan-3 spacecraft was successfully launched onboard LVM-3 on July 14, 2023, at 14:35 hrs from the Satish Dhawan Space Centre, SHAR.

On the milestone, Mukesh Kochar, National Head - Wealth Management, AUM Capital said, "It is one of the biggest milestones for India. India currently contributes around 2-3% to the global space economy and it is expected to contribute around 8-10% in the next 8-10 years. This will establish India as a cost-effective satellite launcher and a global opportunity may emerge."

He added sectors like aerospace & defence will get a boost. There are around 140 registered space startups in India. These startups should attract a lot of investments after the success of this remarkable journey. The budgetary allocation is also expected to increase going forward. So overall this will give a boost to the Indian economy.

Here's how defense and aerospace stocks performed on Thursday:

Larsen & Toubro:

This construction giant hit a fresh 52-week high of Rs 2,767 apiece on Thursday after the soft-landing on the lunar. After hitting record highs, the stock however felt slight profit booking. Currently, it traded at Rs 2709.95 apiece, down by 0.28% on BSE. The stock gained by nearly 2% in five trading sessions. L&T has been associated with India's Space Program for over five decades.

The company also plays a critical role in the launch of the LVM3 M4 Chandrayaan Mission. In a hallmark achievement, L&T has been involved in this mission starting from the manufacturing of subsystems to mission tracking.

Hindustan Aeronautics:

This leading aerospace and defense stock touched a new 52-week high of Rs 4,138.80 apiece on August 24 as well. Investors are cashing in the gains and hence the stock currently trades at Rs 4026.65 apiece, marginally down. In 5 trading sessions, HAL shares have rallied by nearly 4% on BSE.The company supplies components for National Aerospace Laboratories (NAL), and in an consortium with L&T, its on the mission to develop Polar Satellite Launch Vehicle (PSLV) rockets.

Bharat Forge:

The stock rallied to hit a new 52-week high of Rs 1052 apiece earlier in the day. The stock currently trades up by a per cent to Rs 1042.50 apiece on BSE. In 5 trading sessions, the stock zoomed by nearly 9% on the exchange.

According to Prabhudas Lilladher, Bharat Forge beat revenue expectations by c10% in Q1 led by the export of defense systems and components and the improvement of international subsidiaries. Recently, the company's defense subsidiary Kalyani Strategic Systems bagged orders worth Rs 850 crore. On the back of a strong defense order book, Nomura has recommended buying Bharat Forge with a target price of Rs 1157 per share.

Mishra Dhatu Nigam:

Popularly known as Midhani, the stock touched a new 52-week high of Rs 426.20 apiece today. This defense PU played an active role in the successfully launched Chandrayaan-3 mission. The company had developed and supplied various critical and strategic materials for LVM3 M4, a three-stage heavy lift launch vehicle, for the launch of the Chandrayaan-3 lunar mission.

It traded currently with a 1% upside to Rs 411.95 apiece. In five trading sessions, the stock advanced nearly 8%.

ICICI Securities last week recommended buying Midhani shares for a target price of Rs 467 apiece on the back of strong orders prospects in defence, space provides healthy visibility; and substantial opportunities from other segments too.

Brokerage's note said, "Midhani is set to benefit substantially from increasing capital outlay across its target segments - defence, space, railways, energy etc. With a focus on improving execution, developing product portfolio and exports, we believe the company's operational and financial performance will improve considerably in the coming period. We estimate revenue and PAT to grow at ~20% and ~18% CAGR over FY23-25E." It added, "We maintain our BUY rating on Midhani. We value the stock at Rs 465 per share (based on 40x FY25 EPS)."

BHEL:

Unlike the above-mentioned stocks, BHEL neared its 52-week high of Rs 113.35 apiece on the day. The stock touched an intraday high of Rs 113 apiece before trading at Rs 110.05 apiece up by 0.5% at the time of writing. But in 5 days, the stock has skyrocketed by 10%.

For more than two decades, BHEL has been fabricating space-grade solar panels for ISRO's satellites. In the Chandrayaan-3 mission, BHEL supplied batteries, while its Welding Research Institute (WRI) played the role of manufacturing and supplying bi-metallic adaptors.

Amit Anwani - Research Analyst, Prabhudas Lilladher on August 22 said, "We believe, pickup in thermal power orders and companies focus on diversification in segments such as railways, defence, nuclear, hydro augurs well for the company in long term."

L&T Technology Services:

L&T-backed subsidiary L&T Technology Services also touched a new 52-week high of Rs 4427.20 apiece earlier in the day. It currently traded at Rs 4374.15 apiece, marginally up on BSE. In five sessions, the stock gained by 2%. L&T Tech specializes in the development of high-performance engineering solutions for global Aerospace and Defense manufacturers.

On August 23, in a research note, Kotak Institutional Equities said, " LTTS sees an increasing deal pipeline and expects to convert some of the deals in the near term. The company has undertaken multiple initiatives to enhance capabilities, focus on growth accounts and invest in GTM to drive sustainable growth in the medium term."

Other space-related stocks:

After gaining in previous sessions, Linde India witnessed selling on Thursday as the stock traded at Rs 5784.90 apiece down by 2.75% on BSE. They did inch closer Rs 6,000 mark in the early session by hitting an intraday high of Rs 5999.95 apiece. In 5 trading sessions, Linde India has advanced by over 16.3%.

On the other hand, Centum Electronics skyrocketed by 11.2% to trade at Rs 1830 apiece on BSE. The stock also touched a new 52-week high of Rs 1,970 on Thursday. Further, Paras Defence and Space Technologies stock traded at Rs 778 apiece, rising by 8.4% on BSE after touching a new 52-week high of Rs 841.80 apiece on BSE.

Avantel too gained massive traction and traded at Rs 254 apiece, surging by 8.04%. The stock hit a new 52-week high of Rs 259.95 apiece today as well.

MTAR Technologies also witnessed stellar buying as the stock traded at Rs 2389.95 apiece, up by 7.62% on BSE after touching a new 52-week high of Rs 2,450 apiece.

In five sessions, Centum stock has zoomed by a huge 29%, while Paras Defence stock jumped by 15%, and Avantel rallied by 22%. Also, MTAR gained by over 5.2%.

Meanwhile, PTC Industries traded at Rs 5990.60 apiece, up by 1.77%, while Zen Technologies slipped by 1.3% to Rs 824 apiece on August 24.

Earlier on August 23, Bloomberg reported that a total of 13 companies involved in space and satellites-related business have added more than $2.5 billion in market value this week ahead of Chandrayaan-3's landing.

Santosh Meena, Head of Research at Swastika Investmart believed that a successful landing of Chandrayaan-3 is likely to generate positive sentiment for these companies, potentially boosting their stock prices.

However, Meena also added, "Despite the short-term gains, the overall long-term outlook for these counters remains bullish. Investors would be wise to maintain their positions, viewing any profit booking as a chance for long-term entry. However, for traders, chasing these stocks immediately after the event might not be advisable. Waiting for potential profit booking could offer more favourable entry points, aligning with a strategic long-term investment approach."

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, znor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.