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Defence stocks: An alpha for a defensive portfolio

Strong execution and revival in earnings backed by robust order book should augur well for defence companies in the near to medium term

March 18, 2021 / 07:28 PM IST
Defence stocks: An alpha for a defensive portfolio

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

Highlights - Strong improvement in execution led to revenue growth - Availability of equipment, easing transportation and labour issues - Lower cost and higher scale help in boosting operating margins - Earnings trajectory remains strong, backed by strong orders Defence companies, on an aggregate basis, had recorded a steep 42 per cent year-on-year (YoY) drop in revenues at the peak of pandemic during the first quarter of the current fiscal. Interestingly, thereafter, every quarter, this same set of companies has delivered a reasonable growth, led by...

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