India's defence sector tailwinds still strong; capex concerns inflated, Jefferies says

Bharat Electronics

25/02/2025 09:35

** Jefferies says structural tailwinds in India's defence
sector, such as rising government capex and higher share of
domestic manufacturing, are still intact
    ** Adds, recent correction in Indian defence stocks is due
to "unduly exaggerated" concerns
    ** Nifty sub index of defence stocks down ~23% in 6 months
over worries about potentially lower defence expenditure by
government  
    ** Brokerage says, FY26 defence capex estimate at ~1.9
trillion rupees ($21.81 billion) to grow at 13% y/y compared
with 3.5% growth in FY25
    ** Says multi-year nature of defence contracts implies
little impact from short-term upheavals in capex growth
    ** Cites buy-rated Bharat Electronics  BAJE.NS  as its top
pick
    ** Also overweight on buy-rated Hindustan Aeronautics
 HIAE.NS 
    ** On the day, BAJE largely flat at 257.5 rupees, HIAE down
1.37% at 3305 rupees; stocks up 25.9% and 8.2%, respectively,
over last 12 months


($1 = 87.1250 Indian rupees)

 (Reporting by Ananta Agarwal in Bengaluru)
 ((Ananta.Agarwal@thomsonreuters.com))