Aashish Tater, Head of Research at Fort Share Broking share his view on Pipavav Defence.
Tater told CNBC-TV18, "We have been bullish on defence as a sector rather than only Pipavav Defence. Any sector which has been open for private participation has found wealth creators. Defence as a sector is one uniquely poised sector, which has got tremendous offing in days to come."
He further added, "As far as percentage of expenditure to GDP growth and land bank area and percentage of expenditure is concerned, on both parameters India needs to workout in terms of increasing its expenditure. Other countries roughly allocate budget close to 3-3.5% or even 2.5% on conservative side and that is for developed nations. So, there is a lot of opportunity that is going to come."
"To take a reference of P-75I (Project 75 India) and others, India requires roughly 18 submarines, 7 stealth submarines. This is during a phase when India lost three submarines into a non war area. This shows that there is a tremendous opportunity in terms of requirements. From defence perspective our neighboring countries have been spending a lot, so we need to ramp up."
"We feel there will be a higher allocation and the opportunity could be close to USD 50 billion for project defence ahead. For Pipavav, there has to be three phased growth strategy for the sector. Firstly, mapping your own potential and building infrastructure, then tieing up with technologically advanced companies and thirdly building up on indigenous technology."
"I am taking a rough call that within next five years we will not be able to come up with some great indigenous technology. But if I map this potential, Pipavav has an edge over L&T and over ABG Shipyard because they have got tie up with world renowned companies like SAP, Babcock, DCNS and Sembcorp. Going forward I see a lot of potential."
"Another thing that has came into limelight is the offsetting policy. If we expect USD 50 billion of order outflow, 30% needs to be processed by Indian companies. That comes to almost Rs 60,000 crore over next three to four years with a comfortable position in terms of order book visibility."
"From a valuation perspective, Pipavav being a rich man
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