BEL, BDL, HAL, SOIL Industries: Target prices for 4 defence stocks

360 ONE Capital in a note on defence and aerospace sector maintained 'Buy' rating on Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Solar Industries India Ltd. It suggested a 'Hold' rating on Bharat Dynamics Ltd (BDL). 360 ONE Capital said DAC's recent Rs 52,000 crore worth approvals for capital acquisition proposals is strategically oriented towards strengthening India's air defence architecture, with a strong emphasis on counter-UAV systems, missile defence and next-generation aerial platforms. 

While approved AoNs do not immediately lead to orders, the scale of approval over the past few years provide comfort on order inflows for players across the ecosystem over the medium-term, the domestic brokerage said. "Approvals for certain products also underscore government's emphasis on inducting emerging technologies to address capability gaps and white spaces. AoN approvals for FY24/25/26 stood at Rs 3.8 lakh crore/Rs 2.2 lakh crore/Rs 9.28 lakh crore, respectively," 360 ONE Capital said.

It said the sharp acceleration over the past few years suggests that the pace of ordering is likely to remain structurally elevated going forward.

"Overall, this AoN tranche reinforces three key themes: 1) Continued strengthening of India's layered air defence architecture. 2) Growing investments in unmanned and ISR capabilities across the services. 3) Sustained modernisation of defence platforms and protection systems," 360 ONE Capital said.

360ONE Capital suggested a target price of Rs 5,580 for HAL, based on 34 times estimated March 2028 earnings per share (EPS). For BEL, 360ONE Capital suggested a target for Rs 507. The brokerage suggested targets of Rs 1,185 for BDL and Rs 20,164 for Solar Industries. 

Beyond key players, a broader ecosystem of defence electronics and subsystem providers including Astra Microwave, Data Patterns, Paras Defence & Space Technologies, Premier Explosives, etc - is well-positioned to benefit as these AoNs translate into orders, 360 ONE Capital said.

In an earlier note, Antique identified BDL, BEL and Solar Industries as potential beneficiaries of Rs 52,000 crore AoNs. The brokerge maintained its 'Buy' on defence stocks namely Mazagon Dock Shipbuilders, HAL, BEL, BDL, Zen Tech Ltd, Solar Industries and PTC Industries.

Among defence stocks, Antique suggested target of Rs 1,558 for BEL, Rs 2,245 for BEML, Rs 532 for BEL, Rs 1,693 for Cochin Shipyard, Rs 3,141 for GRSE, Rs  5,706 for HAL, Rs 3,275 for Mazagon Dock and Rs 18,633 for Solar Industries. The brokerage finds PTC Industries and Zen Tech worth Rs  24,415 and Rs 1,700, respectively.

Also, following the development, MOFSL said BEL trades at 43.5 times on FY27 earnings, as it suggested a target price of Rs 510 on the stock. This brokerage suggested a target of Rs 5,500 on the stock. MOFSL is 'Neutral' on BDL with a target of Rs 1,250, based on the 42x two-year forward earnings. MOFSL has 'Buy' on Astra Microwave with a target of Rs 1,715. It finds ZEN Tech worth Rs 1,600.