Defence shares rose for third straight day on October 3 with private defence stocks like Solar Industries, PTC Industries, Astra Microwave, Data Patterns, Azad Engineering leading the gains by rising up to 8%.
The positive sentiment on the private defence stocks emerged by Goldman Sachs initiating coverage on eight Indian defence stocks due to various factors like six-fold rise in domestic defence spending, scope for indigenisation and export expansion.
The global brokerage notes that despite India being a top defense spender and importer, investor attention remains skewed toward public-sector firms, even as private-sector players offer stronger growth and deeper exposure to advanced technologies.
Private defence players are expected to report a higher Compounded Annual Growth Rate (CAGR) for its Earnings per Share (EPS) of 32%, in comparison to 13% for PSU stocks, Goldman Sachs said, adding that the private players could also be bigger beneficiaries from the rise in the global defence spending.
Shares of Azad Engineering rose up to 8% on October 3 to Rs 1,718 apiece after Goldman Sachs said the stock will deliver stronger EPS growth than global peers, with improving RoE and sustained momentum through FY33. It has a 'Buy' rating on the stock with a target price of Rs 2,055.
Solar Industries and PTC Industries rose 3.5% and 4%, respectively, as Goldman Sachs believes Solar Industries has a unique moat in high energetic materials and PTC Industries is establishing itself as a leading aerospace grade titanium and superalloy player.
The brokerage initiated coverage on Astra Microwave, Data Patterns and Bharat Electronics with 'Buy' rating, which rose 11%, 7% and, 0.5%, respectively, on October 3.
Meanwhile, Hindustan Aeronautics Ltd shares were trading 1.4% higher after being assigned 'Neutral' rating by Goldman Sachs and Bharat Dynamics shares were trading nearly 1% higher after the broker gave a 'Sell' rating.
At 2:30 pm on October 3, Nifty India Defence index was trading 1.75% higher at 8,117, taking its three-day gains to 3.5%.
With inputs from Reuters
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