The defence industry includes engineering, production and maintenance companies for military facilities, equipment and material. India used to be one of the top importers of defence technology, however, over the past few years, the country has concentrated on lowering its reliance on foreign defence imports with programs like “Make in India” and “Atmanirbhar Bharat.” As a result, a few companies got better business opportunities and have delivered multibagger returns in the past year:
Data Patterns (India) Ltd
Data Patterns is a vertically integrated Defence and aerospace electronics solutions provider that caters to indigenously developed defence products in the industry. It manufactures various products for space applications at its ISRO-approved manufacturing facility.
In the past year, the company’s share price increased from ₹ 704.05 to ₹ 1599.00, delivering multibagger returns of 127%. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares a year ago, the value of their holdings would have been ₹ 2.27 lakhs today!
For the financial year ended March 31, 2023, the company reported a 45.87% increase in its net profit to ₹ 124.00 crores, against ₹ 93.97 crores reported in the previous year. Its revenue from operations increased to ₹ 453.45 crores, up 31.96% against ₹ 310.85 crores reported in the previous year.
Data Patterns is a small-cap company with a market capitalization of ₹ 8,984 crores. It has a return on equity of 14.24% and is debt free. Its shares were trading at a price-to-earnings ratio (P/E) of 67.67 which is substantially higher than the industry average of 38.32, indicating that the stock might be overvalued as compared to its peers.
Mazagon Dock Shipbuilders
Mazagon Dock Shipbuilders is primarily engaged in building & repairing ships, submarines and various types of vessels and related engineering products for various domestic and international clients. It builds ships for the defence as well as the commercial sector.
In the past year, the company’s share price increased from ₹ 284.35 to ₹ 711.90, delivering multibagger returns of 171.46%. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares a year ago, the value of their holdings would have been ₹ 2.71 lakhs today!
The company is yet to release its results for the quarter and the year ended March 31, 2023. However, it reported a revenue of ₹ 1815.91 crores in the December quarter, up 16.97% as compared to ₹ 1,552.5 crores reported in the corresponding quarter last year. Its profit climbed a whopping 68.68% to ₹ 337.26 crores in the December quarter, as compared to ₹ 199.94 crores reported in the year-ago period.
Mazagon Dock Shipbuilders is a small-cap company with a market capitalization of ₹ 15,771 crores. It has an ideal return on equity of 16.57% and is debt free. The company’s shares were trading at a price-to-earnings ratio (P/E) of 16.57 which is substantially lower than the industry average of 38.32, indicating that the stock might be undervalued as compared to its peers.
Apollo Micro Systems
Apollo Micro Systems is a pioneer in the design, development, assembly and testing of electronic and electro-mechanical solutions. It develops and sells cutting-edge technology-based solutions for industries like the railways, automotive, and homeland security, in addition to its core customers in the aerospace, defence, and space industries.
In the past year, the company’s share price increased from ₹11.78 to ₹ 32.90, delivering multibagger returns of 179.29%. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares a year ago, the value of their holdings would have been ₹ 2.79 lakhs today!
The company reported a revenue of ₹ 82.35 crores in the December quarter, up 27.50% as compared to ₹ 64.59 crores reported in the corresponding quarter last year. Its profit climbed a whopping 95.27% to ₹ 6.60 crores in the December quarter, as compared to ₹ 3.38 crores reported in the year-ago period.
Apollo Micro Systems is a penny stock with a market capitalization of ₹ 679 crores. Its promoters hold a 59.10% stake in the company followed by retail investors with 37.25%, mutual funds with 3.53% and foreign institutions with 0.12%.
Written by Simran Bafna
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