HAL, BEL, BDL, Mazagon Dock: Defence Stocks Rally On BrahMos Missiles Deal; Motilal Likes 4 Defence Shares

Majority of defence stocks rallied on March 10, after Indonesia signed an agreement with India to purchase the BrahMos missile system. This mega deal is expected to give big boost to major defence players of India. Accordingly, shares of Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Cochin Shipyard, GRSE, Mazagaon Dock and Bharat Dynamics (BEL) surged sharply. Also, the performance in some of the defence stocks turned bullish after brokerage Motilal Oswal recommended BUY on four of the companies on BSE and NSE.

Defence Stocks On March 10:

The Nifty India Defence index surged by nearly 1% to end at 8,403.90. The benchmark has rallied more than 5% amidst geopolitical crisis and Middle East conflict.

Best Performance Defence Stocks On March 10:

BEL which is the largest defence company of India, surged by over 1.4% followed by its rival HAL who gained by over 1.51%. But it was BDL shares which outperformed the two giants, with nearly 4% gains.

But shipping giant, Mazagon Dock Shipbuilders, stood as the top performer on the index with nearly 4.3% upside. Also, its counterparts like Garden Reach Shipbuilders & Engineers (GRSE) and Cochin Shipyard climbed by nearly 2% each, while MTAR Technologies surged nearly 3%.

Stocks like Astra Micro, BEML and Midhani soared by 2% to 2.5%. Dynamatech scrip jumped nearly 3% and Cyient DLM allied by 4.2%. Unimech also was higher 1%.

Top Underperformers Of March 10:

Among the losers included Solar Industries, Data Patterns, Bharat Forge and Paras Defence stocks who tumbled by 1% to 2%. Zen Tech was marginally down.

BrahMos Missiles Deal:

Indonesia's defence ministry spokesperson, Rico Ricardo Sirait told Reuters that their country signed a deal with India to procure the BrahMos missile system.

As per reports, defence stocks like HAL, Data Patterns, Paras Defence, Premier Explosives and PTC Industries are expected to benefit from the agreement as they are part of the broader BrahMos supply system.

What Are Brahmos Missiles?

The BrahMos (also designated as PJ-10) is a long-range, ramjet-powered supersonic cruise missile that can be launched from submarines, ships, fighter aircraft or TEL. It is a joint venture between India's Defence Research and Development Organisation (DRDO) and the Russian Federation's NPO Mashinostroyeniya, who together have formed BrahMos Aerospace. The missile is based on P-800 Oniks. The name BrahMos is a portmanteau formed from the names of two rivers, the Brahmaputra of India and the Moskva of Russia, as per Wikipedia.

Defence Stocks Performance In 30 Days:

Over the past 1 month, majority of defence stocks have rallied significantly. Their 1-year performance also been stellar. Despite the latest decline, Data Patterns is still the best performing defence stock with nearly 21% gains in 1-month and emerging as multibagger with over 110% upside in 1-year. Another multi-bagger is MTAR Technologies with over 181% gains in 1-year. Stocks like BEL, GRSE, Bharat Forge, Astra Micro and DYNAMATECH have given more than 6o% to 85% returns in a year.

Defence Stocks To Buy:

Analysts at Motilal Oswal have recommended BUY on four major defence stocks. In a note, these analysts said that the current West Asia conflict could drive higher global defence spending because nations would most likely prioritise security and military readiness. For Indian defence sector, the brokerage believes this sector is well poised to benefit from both rising procurement and surge in export opportunity.

However, Motilal also alerted about supply chain constraints especially related to specialized components and imported subsystems in the near term. This could impact execution timelines of certain defence players.

Nonetheless, Motilal pointed out that majority of defence companies management have signalled at strong visibility for order finalization in the next 15 months to 18 months driven by large, named programs which are at advanced stages.

Here are the four defence stocks recommended to BUY:

Bharat Electronics (BEL): BUY For Rs 520 Target Price

Hindustan Aeronautics (HAL): BUY For Rs 5,500 Target Price

Bharat Dynamics (BDL): BUY For Rs 1800 Target Price

Astra Micro: BUY For Rs 1,150 Target Price

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