Defence stocks to buy: BEL, Mazagon Dock, HAL, PTC Ind are Antique's 4 top picks

Antique Stock Broking recently hosted its Defence Conference 4.0, where it underscored the vibrant future of India's defence sector. The event highlighted a capital outlay of Rs 13.8 lakh crore by the Government of India for domestic defence procurement, affirming the sector's sustained growth prospects. This significant investment is expected to bolster the capabilities of domestic defence players, ensuring that India's defence story remains robust and promising.

The conference, attended by leading industry players and investors, featured participation from companies such as Mazagon Dock Shipbuilders Ltd, Zen Technologies Ltd, and unlisted player Tata Advanced Systems. Industry experts shared insights on defence manufacturing and electronics, contributing to a comprehensive overview of the sector. The presence of such a diverse array of participants underscored the importance of collaboration in advancing India's defence capabilities.

Key takeaways from the conference included the emphasis on 'Atmanirbharata' or self-reliance, with a strong focus on indigenisation and domestic procurement. The need to be well-prepared for conflicts, especially concerning the China-Pakistan-Turkey axis, was highlighted as a unique security challenge for India. This strategic focus aims to ensure that India is not only self-sufficient but also strategically prepared for any potential threats.

Antique Stock Broking recommended four top defence stocks based on robust order pipelines and strategic opportunities. Hindustan Aeronautics Limited (HAL) is positioned as a key beneficiary of India's armed forces modernisation, with a potential order pipeline worth Rs 2 lakh croreby 2030. HAL's strategic partnerships and technological advancements are expected to play a crucial role in meeting the future demands of the Indian Air Force.

Bharat Electronics Limited (BEL) was also recommended due to its leadership in the defence electronics segment. BEL's transition from product manufacturing to system integration and expected orders for missile systems like QRSAM were noted as significant growth drivers. This evolution positions BEL as a pivotal player in the integration of advanced missile systems, enhancing its competitive edge in the market.

Mazagon Dockyards and Shipbuilders, renowned for constructing complex vessels and submarines, was another top pick. Upcoming orders for Scorpene submarines and collaborations with Thyssen Krupp for technology transfer were identified as pivotal opportunities. These collaborations are anticipated to enhance Mazagon Dockyards' technological capabilities and expand its order book significantly.

PTC Industries, through its subsidiary Aerolloys Technologies, is developing a Strategic Material Technology Complex in Lucknow. This facility could significantly boost revenue, with projections of 10-20x growth over the next five to six years. The complex is poised to become a hub for advanced materials and manufacturing, driving substantial growth and innovation in the sector.

The domestic manufacturing ecosystem is evolving, with private sector participation playing an important role. Stability in the pricing environment is anticipated, supporting profitability across most defence equipment manufacturers. This stability is expected to foster a conducive environment for sustained growth and innovation within the industry.

Export potential was also discussed, focusing on light combat aircraft, helicopters, and missiles. Such exports can strengthen India's position in the global defence market and enhance its strategic capabilities. By expanding its export portfolio, India aims to bolster its geopolitical influence and economic growth.

Overall, Antique Stock Broking maintains a positive outlook on the Indian defence sector, supported by government policies and increasing domestic and export demand. The recommendations provided at the conference offer investors insights into key growth opportunities within the industry. As India continues to advance its defence capabilities, the sector is poised for significant growth and development.