7 hrs ago
HSBC Sets Mixed Targets for Indian Defence Stocks
HSBC, a foreign brokerage, studied several Indian defence companies.
It gave Hindustan Aeronautics Limited a positive 'Buy' rating.
HSBC also gave Bharat Dynamics Limited a 'Hold' rating, even though it saw room for the share price to rise.
Bharat Electronics Limited received a Rs 525 target because of its defence-electronics business and expected growth.
HSBC was more cautious about Mazagon Dock Shipbuilders Limited and gave it a 'Reduce' rating.
Astra Microwave Products and Data Patterns were also rated 'Hold'.
HSBC said it likes the businesses and growth outlook of several companies.
However, it believes some shares already look expensive after a strong rise in defence stocks.
HSBC rated Hindustan Aeronautics Limited 'Buy' with a Rs 6,350 target, implying 35% upside.
Bharat Dynamics Limited received a 'Hold' rating and Rs 1,370 target, implying 21% upside.
HSBC set a Rs 525 target for Bharat Electronics Limited, citing defence-electronics exposure and growth visibility.
Mazagon Dock Shipbuilders Limited was rated 'Reduce' with a Rs 1,860 target, indicating 17% downside.
Astra Microwave Products, Data Patterns and Solar Industries were initiated with 'Hold' ratings amid valuation concerns after the sector's rally.
- Who
- HSBC and the Indian defence companies it evaluated, including Hindustan Aeronautics Limited, Bharat Dynamics Limited, Bharat Electronics Limited, Mazagon Dock Shipbuilders Limited, Astra Microwave Products, Data Patterns and Solar Industries.
- What
- HSBC issued ratings and target prices ranging from 'Buy' to 'Reduce' for several defence stocks.
- Where
- The share-price references concern Indian stock-market trading, including the BSE.
- When
- The ratings and market prices were reported on Wednesday.
- Why
- HSBC cited business growth and defence-electronics exposure, but also said valuations were rich after the sector's sharp rally.
Growth Potential
Valuation Caution
Defence-sector outlook
Growth Potential
HSBC said it likes the underlying businesses and growth outlook of Bharat Dynamics Limited, Astra Microwave Products, Data Patterns and Solar Industries.
Valuation Caution
HSBC said valuations were rich after the sharp rally in the defence sector, leading it to use 'Hold' ratings for those companies.
Stock-specific assessment
Growth Potential
Hindustan Aeronautics Limited was rated 'Buy' with 35% potential upside, while several other companies also had targets above their reported trading prices.
Valuation Caution
Mazagon Dock Shipbuilders Limited was rated 'Reduce' with a target indicating 17% downside, showing HSBC's caution toward at least one major defence stock.
Key facts
- Hindustan Aeronautics Limited
- 'Buy' rating; Rs 6,350 target; 35% potential upside.
- Bharat Dynamics Limited
- 'Hold' rating; Rs 1,370 target; 21% potential upside.
- Bharat Electronics Limited
- Rs 525 target, supported by defence-electronics exposure and strong growth visibility.
- Mazagon Dock Shipbuilders Limited
- 'Reduce' rating; Rs 1,860 target; 17% potential downside.
- Astra Microwave Products
- 'Hold' rating; Rs 1,800 target; 13% potential upside.
- Data Patterns
- 'Hold' rating; Rs 4,860 target; 11% potential upside.
- Valuation view
- HSBC said several underlying businesses and growth outlooks were attractive, but valuations were rich after the sector's sharp rally.
Sources
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