Nomura Holdings Inc. is a global Financial Services Group with an integrated network spanning 30 regions and countries. The Group acts as market makers, trading in equity & fixed income securities, including interest rates, currencies, derivatives, and other structured products.
Recently, Nomura initiated coverage on the Defence sector with a buy rating, as the international brokerage is bullish, covering the sector’s estimate of $138 billion opportunity over FY24 to FY32 and further legs in the upcycle as the Indian Government is following through on all defence-related policies.
The Brokerage also stated that the country’s Defence sector is in a good position to meet the future needs of the armed forces. Moreover, increasing procurement of equipment by the Government from local companies will bring more attention to the industry.
Listed below are two stocks in the ‘Defence’ sector that one could add to their watchlist after Nomura sees a potential upside of up to 35 percent from current levels:
Hindustan Aeronautics Limited
With a market capitalization of Rs 2.57 lakh crores, the stocks of Hindustan Aeronautics Limited (HAL) started their trading session on Thursday at Rs 3,899.90 and closed the session at Rs 3,843.15, slipping approximately 0.50 percent compared to the previous closing level of Rs 3,860.35 apiece.
Nomura gave a ‘Buy’ recommendation on the stocks of HAL with a target price of Rs 4,750, indicating a jump of approximately 24 percent compared to the prevailing share price level.
The investment rationale for the target price pertains to the company’s moat in the ‘fighter aircrafts’ and ‘helicopter’ space. Moreover, HAL’s capability upgrade provides a basis for developing its ‘indigenous engine’ program.
During the recent financial quarters, the company’s basic business indicators, viz, its operating revenues as well as after-tax profits, reported a jump in numbers with the former increasing from Rs 5,636 crores during Q2FY24 to Rs 6,061 crores during Q3FY24, and the latter, during the same period, rising from Rs 1,235 crores to Rs 1,254 crores.
Bharat Electronics Limited
With a market capitalization of Rs 1.66 lakh crores, the stocks of Bharat Electronics Limited (BEL) started their trading session on Thursday at Rs 234.50 and closed the session at Rs 226.80, slipping approximately 2.10 percent compared to the previous closing level of Rs 231.70 apiece.
Nomura gave a ‘Buy’ recommendation on the stocks of BEL with a target price of Rs 300, indicating a jump of approximately 32 percent compared to the prevailing share price level.
The investment rationale for the target price pertains to the company’s increased visibility of order inflows, conviction on margin delivery, and expansion in the return ratios.
During the recent financial quarters, the company’s basic business indicators, viz, its operating revenues as well as after-tax profits, reported a jump in numbers with the former increasing from Rs 4,009 crores during Q2FY24 to Rs 4,162 crores during Q3FY24, and the latter, during the same period, rising from Rs 790 crores to Rs 860 crores.
Written by Amit Madnani
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