The defence industry in India is a significant contributor to the nation’s economy and stock market. The Indian government has been increasing defence spending, potentially leading to increased demand for defence products and services, benefiting defence companies.
Listed below are such defence stocks whose PE is less than the industry:
DCX Systems Ltd
With a market capitalization of Rs. 3,201 crores, the shares of DCX Systems started Friday’s trading session on a flatter note at Rs. 287.55. During the trading session, the shares hit a high of Rs. 292.50, gaining around 2 percent and closed the day at Rs. 288 apiece.
Looking at the company’s financial statements, the revenue magnified by 278 percent from Rs. 198.16 crores during the December quarter to Rs. 746.2 crores in the March quarter. In addition, the net profits zoomed by 153 percent from Rs. 13.38 crores to Rs. 32.95 crores during the same timeframe.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 6.72 percent and a return on capital employed (RoCE) of 10.83 percent for the period spanning FY23-24.
Moreover, the stock might be deemed undervalued, given its PE ratio of 47 times, in contrast to the industry average of 62 times.
Hindustan Aeronautics Ltd
With a market capitalization of Rs. 3,17,357 crores, the shares of Hindustan Aeronautics started Friday’s trading session on a flatter note at Rs. 4,666.65 compared to its previous close of Rs. 4,666.60. During the trading session, the shares hit a high of Rs. 4,788, gaining around 2 percent and closed the day at Rs. 4,745 apiece.
Coming onto the company’s financial statements, the revenue jumped by 143 percent from Rs. 6,061.28 crores during the December quarter to Rs. 14,768 crores in the March quarter. In addition, the net profits surged by 242 percent from Rs. 1,261.51 crores to Rs. 4,308.68 crores during the same period.
Due to consistent operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 24.72 percent during FY 22-23 to 26.15 percent in FY 23-24, and, the return on capital employed (RoCE) zoomed from 18.04 percent to 24.49 percent during the same timeframe.
Furthermore, the stock might be deemed undervalued, given its PE ratio of 41.8 times, in contrast to the industry average of 62 times.
As per the latest data, the HAL Order book stands at Rs. 94,000 crores and expects to increase to Rs. 1,20,000 crores by the end of the fiscal year.
Avantel Ltd
With a market capitalization of Rs. 2,987 crores, the shares of Avantel Ltd started Friday’s trading session on a flatter note at Rs. 124 compared to its previous close of Rs. 123.85. During the trading session, the shares hit a low of Rs. 122.50, losing around 2 percent and closed the day at Rs. 122.80 apiece.
Looking at the company’s financial performance, the revenue decreased by around 30 percent from Rs. 59.33 crores during Q3FY24 to Rs. 41.76 crores in Q4FY24. On the other hand, the net profits declined by 26 percent from Rs. 16.32 crores to Rs. 12.15 crores during the same period.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 32.02 percent and a return on capital employed (RoCE) of 44.35 percent for the period spanning FY23-24.
Moreover, the stock might be deemed undervalued, given its PE ratio of 53.9 times, in contrast to the industry average of 62 times.
Bharat Electronics Ltd
With a market capitalization of Rs. 2,06,902 crores, the shares of Bharat Electronics Ltd started Friday’s trading session on a flatter note at Rs. 274 compared to its previous close of Rs. 273.65. During the trading session, the shares hit a high of Rs. 284.55, gaining around 4 percent and closed the day at Rs. 283 apiece.
Looking at the company’s financial statements, the revenue zoomed by 107 percent from Rs. 4,142.27 crores during the December quarter to Rs. 8,564.08 crores in the March quarter. In addition, the net profits magnified by 111 percent from Rs. 848.12 crores to Rs. 1,785.66 crores during the same period.
Due to increasing operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 21.53 percent during FY 22-23 to 24.40 percent in FY 23-24, and, the return on capital employed (RoCE) zoomed from 26.38 percent to 30.13 percent during the same timeframe.
Additionally, the share can be considered to be undervalued as the PE ratio stands at 51.9 times compared to the industry average of 62 times.
As of 1st April 2024, the order book position of the PSU company, stood at Rs.75,934 crores and also received orders worth Rs.1,150 crores to date during the financial year 2024-25.
The major orders include AMC of Akash Missile System, Combat Management System for Ships, Missile Fire Control System for ships, Laser Range Finders, Communication Network Centre etc.
Written By Vaibhav Patil
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