Defence stock to 'Buy': 100% profit jump likely in Q4 | 35% upside seen - Price target

ICICI Securities in its Q4 preview note on defence sector said PTC Industries Ltd may report exceptional growth for the March quarter, with revenue rising 283 per cent year-on-year (YoY) due to a low base and a ramp-up in subsidiaries.

The domestic brokerage expects PTC Industries to report 136.80 per cent YoY jump in net profit at Rs 33.70 crore for the dourth fuarter compared with Rs 14.20 crore in the same quarter last year. It sees revenue for the quarter soaring 282.60 per cent YoY to Rs 256 crore from Rs 66.90 crore in the corresponding quarter last year. Ebitda for the quarter is estimated at Rs 47.50 crore, up 211 per cent YoY over Rs 15.30 crore. 

PTC Industries Limited is a manufacturer of precision metal components. Through its wholly owned subsidiary Aerolloy Technologies Limited, it manufactures titanium and superalloy castings for Aerospace and Defence applications.

While ICICI Securities has 'Buy' on the stock with a target price of Rs 21,000, PTC Industries is not among the broker's top defence picks. At Monday's close of Rs 15,600, ICICI's target for the stock suggests 35 per cent potential upside.  

"Considering the geopolitical scenario and ongoing wars, we expect procurement in the aerospace segment (missiles/interceptors, drone, radar and munitions) to benefit the most, partially aided by replenishment demand. We like Solar Industries and Azad, as their performance and orderbooks are expected to remain strong. HAL, in the PSU space, may see strong growth in FY27," it said.

The domestic brokerage said Q4 traditionally, is execution-heavy quarter, and this time is likely to be no different.  However, revenue growth is likely to be mixed across defence companies due to exposure to exports and order delays in H1FY26. 

"We expect muted revenue growth for most PSUs (MIDHANI being an exception), while private players appear to be performing better, with margins remaining within the guided range," it said. 

ICICI Securities expects mean revenue growth of 15 epr cent (excluding outlier), with PTC Industries (up 283 per cent YoY), Dynamatic Technologies Ltd (up 27 per cent YoY), Solar Industries (up 31 per cent YoY) and Mishra Dhatu Nigam Limited (up 34 per cent YoY) standing out as strong performers. 

HAL and BEL, ICICI Securities said, are expected to see a modest top-line decline (down 4 per cent YoY) and rise (up 2 per cent YoY), respectively, reflecting a high base and execution headwinds. 

The domestic brokerage said margin pressure is expected at the PSU level. HAL’s Ebitda margin could contract YoY, with PAT down 10 per cent YoY for both HAL and BEL, pointing to cost absorption and product mix effects, the brokerage said.

"Private players present a more differentiated picture; SOIL, PTCIL and ASTM may sustain healthy earnings momentum with PAT growth of 35 per cent, 137 per cent and 31 per cent YoY, respectively, while ZEN is expected to witness a sharp revenue and earnings decline (30 per cent and 48 per cent YoY)," it said. 

Going ahead, order accretion across missile platforms (QRSAM, MRSAM, VL-SRSAM), munitions (Pinaka, Nagastra), and the ramp-up in Tejas Mk-1A deliveries remain the key catalysts for the sector, the brokerage said.