Best Defense Stocks With High FII Holdings: In the world of investing, certain sectors stand out for their unique blend of stability and growth potential. One such sector is defence stocks. These companies operate in an environment where national security and global events play a pivotal role in shaping their success. In this article, we going to look at 5 Best Defence Stocks With High FII Holdings.
Best Defence Stocks With High FII Holdings
For our study of ‘Best Defence Stocks with High FII Holdings’, we will look at a few companies from the defence sector based on various factors like their revenues, profits and margins
Best Defence Stocks With High FII Holdings #1 – Bharat Electronics Limited
Bharat Electronics Limited was established under the Ministry of Defence in 1954 in order to meet the needs of the Indian Defence in specialised electronics.
Today, the company has earned a Navratna status and manufactures equipment for defence and non-defence segments through its 9 manufacturing units spread across India.
Under the defence segment, the company manufactures Radar and Fire Control Systems, Weapon Systems, Communication, Electronic Warfare Systems, Network network-centric systems (C4I), Avionics, Anti-Submarine Warfare Systems and sonars, Electro-Optics, Tank Electronics, Gun Upgrades, and Strategic Components.
|CMP||₹ 136.6||Market Cap (Cr.)||₹ 99,449 Cr|
|RoE||22.49 %||RoCE||30.15 %|
|Promoter Holding||51.14%||FII Holding||17.35%|
|Debt to Equity||-||Price to Book Value||6.91|
|Net Profit Margin||16.58 %||Operating Profit Margin||22.53%|
Recently the company has also diversified into Seekers and missiles, Arms and ammunitions, Network & Cyber Security and Unmanned Systems.
Through its selected strategic business units (SBUs) it also caters to Homeland Security and Smart City (HS&SC) business and a dedicated vertical for Medical Electronics and Solutions.
The company has consistently increased its revenues in the past 5 years. During FY23, it reported a net revenue of ₹17,734.44 crores and a net profit of ₹2,940.35 crores. The customers from the defence segment contributed to 87.05% of revenue earned by the company.
As of April 01, 2023, the company’s order book position stood at ₹60,690 Crores. This signifies that the company will have a stable revenue flow for the next few years.
This is a debt-free company having high operating efficiency which can be seen through its ROE and RoCE of 22.49% and 30.15%. As per Q1FY24, the stake held by the promoters and the FII was 51.14% and 17.35% respectively.
Best Defence Stocks With High FII Holdings #2 – Bharat Forge Ltd
Bharat Forge, established in 1961, is one of the leading defence companies in India. It manufactures forgings for various industries including automotive, power, rail, oil & gas, e-mobility, construction & mining, aerospace, and mining.
Furthermore, it is also engaged in manufacturing designing and engineering systems and sub-systems space for artillery guns, protected vehicles, armoured fighting vehicles, ammunition, defence electronics, and small arms.
It has a total of 15 production facilities spread across 5 countries which gives the firm a forging capacity of 750,126 TPA.
|CMP||₹ 1,087.3||Market Cap (Cr.)||₹ 51,536 Cr|
|RoE||7.66 %||RoCE||8.75 %|
|Promoter Holding||45.25%||FII Holding||15.79%|
|Debt to Equity||1.01||Price to Book Value||7.43|
|Net Profit Margin||3.94%||Operating Profit Margin||13.18%|
During FY23, the company generated a net revenue of ₹12,910.26 crores from which it has retained a net profit of ₹508.39 crores. The return ratios of the company were low with the ROE and ROCE standing at 7.66% and 8.75%. Furthermore, the company has a slightly higher debt which brings its debt-to-equity ratio to 1.01.
Kalyani Strategic Systems Limited, the parent company of Bharat Forge has received an export order of USD 155.5 million for supplying artillery gun systems.
These orders will be indigenously developed and manufactured by Bharat Forge with 100% intellectual property rights. Overall, the company has secured orders worth ₹2000 crores in the defence vertical.
Talking about its shareholding pattern, the promoters have consistently held a 45.25% stake in the company over the past few quarters. As of Q1FY23, the FII’s held a 15.79% stake in the company.
Best Defence Stocks With High FII Holdings #3 – Hindustan Aeronautics Limited
Established in 1963, Hindustan Aeronautics Limited is a Navratna company engaged in the design, development, manufacture, repair, overhaul, servicing and upgrade of a wide range of products. The products include aircraft, helicopters, avionics, aero-engines, accessories, aerospace structures and Industrial Marine Gas Turbines.
The company has five complexes including the Bangalore Complex, MiG Complex, Helicopter Complex, Accessories Complex, and Design Complex. These complexes together include 20 production divisions and 10 Research and Design centres that are spread across India.
|CMP||₹ 1,937.95||Market Cap (Cr.)||₹ 1,26,324 Cr|
|RoE||27.18 %||RoCE||30.59 %|
|Promoter Holding||71.64%||FII Holding||5.82%|
|Debt to Equity||-||Price to Book Value||2.59|
|Net Profit Margin||21.64%||Operating Profit Margin||24.82%|
For over 5 decades, the company has been providing its services to Indian Defence Services – IAF, Army, Navy and Coast Guard. Additionally, it has also exported its products and services to various countries over the years.
During FY23, the company generated a net profit of ₹5,827.73 crores on net revenue of ₹26,927.46 crores. Furthermore, the company has received fresh orders worth ₹25,990 crores which brings its outstanding orders to ₹81,784 crores during the end of FY23.
Coming to the return ratios of the company, an ROE of 27.18% and a RoCE of 30.59% suggest a high efficiency in the utilization of company resources. Furthermore, the company has been debt-free over the last three years.
As of Q1FY24, the stakes held by the promoters and the FIIs in the company were 71.64% and 11.90% respectively.
Best Defence Stocks With High FII Holdings #4 – Cyient DLM
Incorporated in 1993, Cyient DLM Limited is an integrated engineering and manufacturing solutions provider that focuses on a product’s whole life cycle, including design, manufacture, and maintenance.
The company provides its services to various industries, including aerospace, defence, medical technology, transportation, consumer products, and heavy equipment. It has a customer base of over 300 customers, including 29 Fortune 500 companies.
Over the years, the company has developed long-term relationships as an integrated partner with a number of marquee customers, including Honeywell International Inc, Thales Global Services S.A.S, ABB Inc, Molbio Diagnostics Private Limited, and Bharat Electronics Limited, with an average relationship lasting more than 11 years as of March 31, 2023.
|CMP||₹678.05||Market Cap (Cr.)||₹5,342.85 Cr|
|RoE||23.08 %||RoCE||16.92 %|
|Promoter Holding||66.66%||FII Holding||7.17%|
|Debt to Equity||1.59||Price to Book Value||5.91|
|Net Profit Margin||10.48%||Operating Profit Margin||3.81 %|
It has three manufacturing facilities located in Mysuru, Hyderabad and Bengaluru with a total manufacturing area of 229,061 sq. ft.
During FY23, the company generated a net revenue of ₹832.03 crores and a net profit of ₹31.73 crores. Its order book stood at ₹2499.7 crores as of Q1FY24.
An ROE of 23.08% and a RoCE of 16.92% indicate decent efficiency in the way the company is utilizing its resources. Though the debt-to-equity ratio of 1.59 signifies a high debt in the company, it has significantly reduced over the past three years.
As of Q1FY24, the stakes held by the promoters and the FIIs in the company were 66.66% and 7.17% respectively.
Best Defence Stocks With High FII Holdings #5 – Cochin Shipyard Limited
Cochin Shipyard Limited (CSL) is the largest public sector shipbuilding and ship repair yard in India. It was incorporated in 1972 and began building ships in 1978. It is a Government of India company under the administrative control of the Ministry of Ports, Shipping and Waterways. CSL is located on the west coast of India in the port city of Kochi, Kerala.
The shipyard constructs ships up to 110,000 DWT and repairs ships up to 125,000 DWT. CSL has constructed a diverse range of vessels such as tankers, bulk carriers, container ships, offshore vessels, and warships. Additionally, the shipyard has provided repair services to numerous ships of varying types.
|CMP||₹ 1,087.75||Market Cap (Cr.)||₹ 12,937.66|
|RoE||6.91 %||RoCE||10.17 %|
|Promoter Holding||72.86%||FII Holding||5.73%|
|Debt to Equity||0.03||Price to Book Value||2.86|
|Net Profit Margin||12.89 %||Operating Profit Margin||11.07 %|
During FY23, the company generated a net revenue of ₹ 2,364.55 crores from which it has retained a net profit of ₹ 304.71 crores. The return ratios of the company were low with the ROE and ROCE standing at 6.91% and 10.17%. The company is almost debt-free and has a debt-to-equity ratio of 0.03.
During the FY23, it has successfully secured major shipbuilding orders viz., 2 Commissioning Service Operation Vessels (CSOV) from Pelagic Group, Cyprus, 6 Next Generation Missile Vessels (NGMV) from the Ministry of Defence and 2 Zero Emission Feeder Container Vessels one each from NAVSHUTTLE 1 AS and NAVSHUTTLE 2 AS, Lysaker, Norway, Companies in the SAMSKIP Group, headquartered in Netherlands.
Talking about its shareholding pattern, the promoters have consistently held a 72.86% stake in the company over the past few quarters. As of Q1FY24, the FII’s held a 5.73% stake in the company.
List Of Defence Stocks With High FII Holdings
The table below puts together the names of Defence Stocks With High FII Holdings covered above along with some more.
|Company||CMP||M.Cap (In Crores)|
|Bharat Electronics||₹ 136.4||₹ 99,815|
|Ashok Leyland||₹ 179.2||₹ 53,599|
|Bharat Forge||₹ 1,084.8||₹ 51,536|
|Hindustan Aeronautics||₹ 3,862.6||₹ 1,28,898|
|Cyient DLM||₹ 700.4||₹ 5,342.85|
|BEML Ltd||₹ 2,326.25||₹ 9,594.06|
|Solar Industries India||₹ 4,629.65||₹ 42,018|
|Cochin Shipyard||₹ 1,106.5||₹ 12,937|
|Data Patterns (India)||₹ 2,095.4||₹ 11,558|
|MTAR Technologies||₹ 2,591.65||₹ 7,369.08|
|Bharat Dynamics||₹ 1,020.5||₹ 18,164|
|Mazagon Dock Shipbuilders||₹ 2,213.4||₹ 43,509|
|Garden Reach Shipbuilders & Engineers||₹ 837.5||₹ 9,125.21|
|Astra Microwave Products||₹ 430.25||₹ 3,953.98|
|Paras Defence And Space Technologies||₹ 737.2||₹ 2,792.4|
As we conclude our study of ‘Best Defence Stocks With High FII Holdings’, one should note that if you are looking to invest in Defence Companies in India, you should keep a close watch on all defence companies besides the five mentioned above.
It should be noted that the selection of these stocks is based mainly on FII holdings. Therefore, it is recommended that investors make their investment decisions based on their own analysis and judgment.
Written By Aaron Vas
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