HAL, Mazagon Dock, BEL, Bharat Dynamics, ZEN Technologies shares in focus ahead of Budget 2024

Defence stocks such as Hindustan Aeronautics Ltd (HAL), Mazagon Dock Shipbuilders Ltd, Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Solar Industries Ltd, ZEN Technologies Ltd, Mishra Dhatu Nigam Ltd and MTAR Technologies, among others, were in focus on Thursday's trade ahead of the interim Budget 2024.

Sharekhan is expecting an increase in outlay towards defence from Rs 5,93,537 crore levels, with focus on acquiring new weapons including aircrafts and warships as well as new defence technologies like drones, and electronic warfare systems.

ZEN Technologies climbed 4.05 per cent to 874.80 on BSE. HAL shares rose 1.12 per cent to Rs 3,033.65. Bharat Electronics advanced 0.62 per cent to Rs 187. Mazagon Dock shares fell 0.98 per cent to Rs 2,268.10. Bharat Dynamics added 0.82 per cent to Rs 1,721.40. MTAR Technologies Ltd tanked 3.37 per cent to Rs 2,030.10 while Solar Industries declined 0.75 per cent to Rs 6,412.50.

ICRA said the defence capital outlay on R&D and acquisitions may be enhanced further, amid the government’s focus on encouraging the development and production of emerging technologies.

Nuvama said it said the stock market is anticipating the capital outlay to grow at 12–15 per cent YoY led by systems modernisation, infra development and iDEX, as the focus on indigenisation and exports ramp-up endure.

Against the market expectations, Nuvama expects the defence capex to be raised by a mere 5–8 per cent YoY with higher allocation towards R&D, UAV/drones, anti-drone systems, as some key large systems are already in the pipeline.

"While on a short-term basis, there could be slight pessimism in the market, medium to long-term outlook remains intact as orders from MoD would continue to flow," Nuvama said.

Choice Broking in a note on BEL noted that defence acquisitions have been on the rise across all forces, spanning warships, fighter jets, tanks, underwater platforms, UAVs, and more. These platforms are expected to yield results in the medium to long term.

The Ministry of Defence (MoD), it said, is strategically planning the modernisation of existing platforms such as tanks, electronic warfare (EW) systems, Aircraft and radars through electronics upgrades.

"Several projects are in the pipeline, with budget allocations for fuses (Rs. 40 billion), Next-Generation Offshore Patrol Vessels (NGOPV - Rs. 25 billion), BMP Tank Upgradation program (Rs. 30 billion), and EW systems (Rs. 20 billion). These orders could materialize by the end of this year or in the subsequent financial year," it noted. 

Also read: Budget 2024 live: FM's speech at 11 am, taxpayers, investors wait with bated breath