52-Week Highs, 335% YTD Gains: Chandrayaan-3's Success Takes Space-Related Stocks To Moon: 2 Shares Top Picks

The Chandrayaan-3 mission's success not only showed India's awestriking capabilities but also made many investors rich in the trading week from August 21 to 25. Many defense stocks witnessed huge buying, registering double-digit growth as far as 21% in the week, and some of them even touched new 52-week highs. It was the best week for defense stocks as traders saw key potential in them with the smooth landing on the lunar's south pole.

Riding on the back of bulls, space-related stocks have given robust returns in 2023 so far, with three stocks even emerging as multi-baggers with up to 335% upside. The Chandrayan 3 mission is expected to open doors for various allied sectors such as aerospace, defence and telecommunication. And amidst this, two stocks are the best bets for wealth creation in the long term. These are Hindustan Aeronautics and Bharat Electronics.

Here's how defense stocks have performed in the week and YTD:

On Friday, the majority of the defense stocks witnessed traders cashing in their profits as they had reached record high levels. However, this also creates an opportunity for further buying as they become affordable too.

L&T, who played a critical role in the launch of the LVM3 M4 Chandrayaan Mission right from the manufacturing of subsystems to mission tracking, on Friday, ended at Rs 2639.45 apiece down by 1.8% on BSE. The stock hit a new 52-week high of Rs 2,767 apiece on August 24th. Broadly, the stock ended on a flat note in the week. But year-to-date, the stock has rallied by nearly 26.4%.

Hindustan Aeronautics share price ended at Rs 3910.85 apiece, down by 1.4% on BSE. Before Friday, the stock touched a new 52-week high of Rs 4,138.80 apiece. Its weekly performance is an upside of 3%, while year-to-date, the stock rallied nearly 54%.

Bharat Forge, also a defense stock, ended at Rs 1021.85 apiece down by 1.9% on BSE, after it clocked a new 52-week high of Rs 1,052 apiece on August 24. Its weekly upside is nearly 5%, while year-to-date, the stock gained by 15.6%.

Unlike the above stocks, Bharat Electronics touched a new 52-week high of Rs 138.20 apiece on Friday before ending the day at Rs 133.35 apiece down by 0.71%. The stock's weekly upside is 4.34%, and YTD gains are 33%.

Heavy electrical equipment, BHEL share price ended at Rs 105.30 apiece, down by 2.14%. The stock had neared its 52-week high of Rs 113.35 apiece on August 24. BHEL's weekly gains are over 7%, but the YTD upside is nearly 31.5%.

Meanwhile, Midhani stock rallied by 1.2% to end at Rs 402.45 apiece on Friday. The stock also touched a new 52-week high of Rs 426.20 apiece. The gain by over 4.2% in the latest week, but its gains in 2023 so far are to the tune of a massive 80%.

L&T Technology Services also ended at Rs 4341.85 apiece down by 1.3% on Friday after touching a new 52-week high of Rs 4,427.20 apiece on August 24.

Among other space-related stocks, Linde India soared by over 17% in the latest week, while YTD, the stock zoomed by a huge 66.1%. Centrum Electronics was the top performer in defense stocks in the latest week with an upside of nearly 21.2%, while its YTD performance makes the stock a multi-bagger with a whopping 143% upside.

Paras Defense and Space Technologies share price also gained nearly 14% in the week, while it advanced by over 27% year-to-date. Meanwhile, Avantel rallied by 14.5% this week and advanced by a huge 235.5% on BSE. Further, MTAR Technologies jumped over 4% this week, while YTD, rallied over 39%.

Additionally, PTC Industries' share climbed over 6%, while its year-to-date upside is nearly 136%. However, Zen Technologies' share dipped by 2% this week, its YTD performance is a breathtaking 335% return to investors.

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.

Chandrayaan-3 is a follow-on mission to Chandrayaan-2 to demonstrate end-to-end capability in safe landing and roving on the lunar surface. It consists of Lander and Rover configuration. 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.

As per Nitin Agrawal, CEO, of Torus Oro PMS, the Chandrayaan-3 soft landing is a stepping stone towards further space exploration efforts. In the next 14 days, Pragyan rover is going to experiment and study the lunar surface. It is expected to find water and also study the stability of the lunar surface to gauge feasibility of future lunar bases. US, Japan and China are also going to send their moon missions over the next few months. If any of these missions discover any potential useful hydrogen fuel production or rare metal mining opportunities, there will be a wave of private efforts towards more space exploration."

Agarwal added, "In India, several companies contributed towards Chandrayan-3 mission. Some of these comapnies are - L&T, Hindustan Aeronautics, Bharat Electronics, MTAR Technologies and BHEL. These companies would continue to benefit if there are more space missions planned in the future. However, space segment contributes a small portion of their revenues and investors should evaluate the entire company before investing."

Further, Manish Chowdhury Head of Research StoxBox explains that the success of the Chandrayan 3 mission will open up doors for various allied sectors such as aerospace, defence and telecommunication (satellite communication and navigation) as well as companies involved such as L&T, HAL, BEL and MTAR Technologies.

Due to the mission's success, Chowdhury added, "A number of these companies have now got the attention of global investors as well. However, we believe one needs to look at the order book and financial statements together while finding a potential stock to buy after the success of Chandrayaan-3 success and not get carried away with the upbeat sentiment post the mission success."

StoxBox's head of research is optimistic in two space-related stocks. These are:

Hindustan Aeronautics Limited: HAL was involved in the development of Chandrayaan 3's lander and mechanical support equipment. We continue to remain positive on HAL due to its strong order book in excess of Rs. 80,000 crores, strong revenue guidance of double-digit growth from FY25 onwards and robust EBITDA margin guidance of 26-27% for the next two years. Moreover, strong traction from the LCA (Light Combat Aircraft) segment, enormous export opportunity, robust order prospects and ongoing reforms in the defense sector with a focus on reducing dependence on imports bode well for the long-term growth trajectory of the business.

Bharat Electronics Limited: BEL provided services to the critical mission of Chandrayaan 3 by manufacturing payloads. We believe the prospects of BEL remain brighter fundamentally on account of various high-value orders, particularly, in all the platforms - missiles, fighter jets and submarines. Also, its order book of Rs. 65,000+ crores and its timely execution capabilities will ensure a smooth runway for steady earnings growth while maintaining book-to-bill at a healthy 2.5-3x. The company's established track record and large manufacturing capacities with an adequate pool of trained manpower and focus on R&D make us believe that the company has strong growth prospects ahead. With the government's Aakash Weapon System, Quick Reaction Surface-to-Air Missile (QRSAM) and submarine programme, BEL is well equipped to fulfil orders and has strong visibility for the next 3-4 years.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.