Defence Sector Companies Poised for Strong Q1 Results, Four Stock Picks Identified by Antique Stock Broking

Ahead of the release of Q1 financial results, the defence sector companies are anticipated to deliver robust performance, driven by a positive business outlook and record-high order books. According to a preview by Antique Stock Broking, a significant 27% year-on-year surge in combined sales is expected for prominent players such as Mazagon Dock, Cochin Shipyard, BDL, BEL, BEML, HAL, PTC Industries Ltd, and Garden Reach.

The analysis further projects a 29% YoY increase in profit before tax and a 30% rise in profit after tax for the quarter across the defence universe. The focus during the earnings announcements will be on margin performance, with expectations of overall margin growth for the sector.

The defence domain is currently benefitting from a conducive environment, buoyed by the government’s emphasis on indigenous defence production under initiatives like ‘Make in India.’ This strategic direction has resulted in a steady flow of substantial orders, reinforcing the order books for the companies.

The ‘Atmanirbhar Bharat‘ initiative has provided a significant impetus to domestic defence firms, with the Ministry of Defence showing a clear commitment to strengthening the indigenous defence ecosystem. Measures such as imposing embargoes on the import of certain defence items, raising the FDI limit, and encouraging setting up manufacturing entities in India by foreign OEMs are driving local production.

Antique Stock Broking remains optimistic about the sector’s growth trajectory, predicting improved execution and profitability fueled by the strong order backlog. While challenges in the supply chain persist due to geopolitical factors affecting some manufacturers, the normalization is expected in FY25, leading to enhanced revenue generation.

As part of their stock recommendations, Antique Stock Broking has identified HAL, Bharat Dynamics, BEL, and Mazagon Dock as top picks within the defence sector, citing their potential for value appreciation.