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Defence stocks: HAL, BEL shares gain over 2%, Nomura sees up to 30% upside
Stock market today: Nomura said India's defence sector is witnessing growth owing to increasing defence budgets government initiatives like “Make in India."
Defence stocks Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) shares rose over 2% today (May 9). This comes after foreign brokerage Nomura initiated coverage on the stocks. In early trade, HAL share price is up to 2.45%, and BEL share price has rose as much as 2.78%. Nomura said that India's defence sector is witnessing major growth owing to increasing defence budgets, modernization efforts and the government initiatives like “Make in India."
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As per the brokerage, there is a significant opportunity for India’s defence sector as it expects momentum in India’s defence exports to continue.
Nomura on HAL shares
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Nomura initiated coverage on HAL stock with a ‘Buy’ rating and put a share price target of ₹4,750 apiece. Nomura said that Hindustan Aeronautics has seen a sharp re-rating since June 2023, with 1-year forward PE shifting to 22x-42x from 16x-22x. The brokerage attributed this to MoU with GE for F414 fighter jet engine, and Approval of Necessity (AoN) for LCA Mk1A, LCH, and upgrades of Su-30 MKI.
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Nomura on BEL shares
Nomura said, “We anticipate that BEL’s premium valuations will endure, supported by enhanced visibility on the platform side, healthy return ratios, and a resilient margin profile." The brokerage forecasts ROEs to increase to 27.7% in FY26F from 23.5% in FY23 and put a ‘Buy’ rating on the stock with a share price target of ₹300 apiece.
