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Business Standard
24-06-2025
- Business
- Business Standard
Defence stocks GRSE, MIDHANI, BEML, BDL, Paras dip up to 6%; here's why
Defence shares price action today Shares of public sector undertaking (PSU) defence companies as well as private sector were down up to 6 per cent on the National Stock Exchange (NSE) in Tuesday's intra-day trade on profit booking after the ceasefire announcement between Israel and Iran. Garden Reach Shipbuilders & Engineers (GRSE), Mishra Dhatu Nigam (MIDHANI), BEML, Paras Defence and Space Technologies, Astra Microwave Products, Bharat Dynamics (BDL), Hindustan Aeronautics (HAL), Cochin Shipyard, Mazagon Dock Shipbuilders, Ideaforge Technology, Apollo Micro Systems and ZEN Technologies declined between 2 per cent to 6 per cent. At 09:41 AM; the Nifty India Defence index, the top loser among sectoral indices, was down 2 per cent, as compared to 0.72 per cent rise in the Nifty 50. Why did defence stocks fall today? The dramatic developments in West Asia culminating in President Trump's announcement of ceasefire indicate that the worst of the conflict is over. The US President Donald Trump announced a 'complete and total' ceasefire between Israel and Iran, signalling a potential end to the near 2-week escalating conflict in West Asia. The ceasefire, brokered by Washington DC, will be phased in over 24 hours and aims to officially conclude what Trump labelled 'THE 12 DAY WAR'. The surprise announcement was made via Trump's Truth Social platform late Monday night, shortly after Iran launched missile strikes on the US military base in Qatar in retaliation to American airstrikes on three Iranian nuclear sites. The US reported no casualties. InCred Equities view on aerospace & defence sector India's defence landscape is poised for transformative growth, underpinned by a record ₹6.81 trillion allocation in 2025‐26 - 13 per cent of total central expenditure - and a decade‐long compound annual spending increase of 9 per cent. A decisive 13 per cent boost in capital outlay further marks the government's commitment to cutting‐edge modernization, funding advanced arms, naval vessels, aircraft, R&D, and critical border infrastructure. This dual thrust of robust budgeting and elevated capital investment not only secures operational readiness but also catalyzes indigenous innovation and strategic self‐reliance, charting a clear trajectory towards technological transformation and sustained sectoral growth. However, due to escalating geopolitical tensions, particularly in the Indo-Pacific region and along India's borders with China and Pakistan, analysts at InCred Equities project the budget to rise by ~10 per cent YoY in FY27F, reaching around ~₹7.49 trillion. Capital procurement from domestic sources has increased from 54 per cent in FY18–19 to a robust 75 per cent (approximately ₹1 trillion) in FY23–24, a benchmark sustained in FY24–25 (₹1.05 trillion) and FY25–26 (₹1.11 trillion). This focus on domestic procurement has significantly empowered domestic players, enabling substantial growth for both defence public sector undertakings (DPSUs) and private companies, the brokerage firm said.
Mint
24-06-2025
- Business
- Mint
Stocks to buy: InCred bullish on HAL, BEL shares; sees up to 26% upside in these defence stocks
The recent escalation of geopolitical tensions in the Middle East amid the Israel-Iran war, and the India-Pakistan conflict last month has renewed investors' focus on defence stocks. India's defence sector growth over the past decade has been driven primarily by government budgets and policies that promote domestic production. The Ministry of Defence's budget has roughly doubled, from ₹ 2.7 lakh crore in 2015–16 to ₹ 6.8 lakh crore in 2025–26, the highest among all ministries, accounting for 13% of the central government's total expenditure. Defence exports rose by 13x since FY16, private sector exports rose by 67x and domestic procurement share surged to 75%, with large headroom for growth. Analysts believe that the geopolitical tensions with China and Pakistan are expected to increase government spending in the coming years. The government's 'Make in India' initiative and policies like the Defence Acquisition Procedure 2020 prioritize domestic procurement, with approximately 75% of the modernization budget allocated to local industries. According to InCred Equities, this focus has positioned defence PSUs as the backbone of India's defence manufacturing ecosystem, producing everything from aircraft and electronics to naval vessels and weaponry. Among the defence PSUs, Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) stand out as the leading contributors, collectively accounting for ~50% of the total production by defence PSU companies, InCred Equities said. HAL, a Navratna company, contributes ~27% of the production, specializing in fighter aircraft, helicopters, and avionics, including the indigenous Light Combat Aircraft Tejas and Advanced Light Helicopter Dhruv. BEL, with a ~21% share, focuses on advanced electronics such as radars, communication systems, and electronic warfare equipment, serving both defence and non-defence sectors. InCred Equities has initiated coverage on HAL and BEL shares with a bullish outlook. Here are the defence stock picks by the brokerage firm: Hindustan Aeronautics' strong order book, coupled with ongoing indigenization and modernization initiatives, underpins a stable growth trajectory — EPS is forecast to rise by 16% YoY in FY26F and 18% YoY in FY27F, InCred Equities said. The brokerage firm initiates coverage on HAL shares with a, 'Add' rating and target price of ₹ 6,325, based on a 40× P/E on Mar FY27F estimates. HAL share price target implies an upside potential of up to 26% from Monday's closing price. Bharat Electricals' robust order book, coupled with expected orders' long-term visibility, provides strong revenue and growth confidence. The success of Operation Sindoor enhances its global standing and export potential. Aided by the government's push for indigenization, and a trusted partnership with the Ministry of Defence, BEL is well-positioned as a key beneficiary in the defence sector, InCred Equities said. It initiated coverage with an 'Add' rating. It has BEL share price target of ₹ 459, based on a 44×P/E applied to forecasted FY27F EPS of ₹ 10.4. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
20-06-2025
- Business
- Mint
Market volatility hits mid and small-caps: Are large-cap stocks a safer bet now?
The recent volatility in the Indian stock market has taken a toll on mid- and small-cap stocks, as investors grow increasingly cautious amid global uncertainty and elevated valuations, prompting them to exit these segments in search of safer bets in large-cap stocks, which are often perceived as more stable during turbulent phases. Global markets have been on edge this week, with the latest escalation between Iran and Israel adding fresh strain to an already fragile global economy—one still grappling with the effects of trade tensions and the ongoing Russia–Ukraine war. However, the Indian stock market managed to end the week with healthy gains, supported largely by strength in blue-chip stocks. Despite rising crude oil prices, prolonged trade tensions, and limited progress in negotiations between the US and its key trading partners, Indian large-cap stocks have continued to draw investor interest. Optimism around corporate earnings—buoyed by a turnaround seen in the March quarter and expectations of stronger performance in the June quarter of FY26—along with relatively reasonable valuations compared to mid- and small-cap counterparts, has led investors to shift their focus toward these more established, higher-priced stocks. Against this backdrop, both the Nifty 50 and Sensex closed with gains of nearly 2%, while the Nifty Midcap 100 and Nifty Smallcap 100 indices remained under pressure for the second consecutive week, each declining by up to 1%. Recent data also indicates a shift in retail investor preference toward large-cap stocks, as ownership in mid- and small-cap counters fell to a nine-quarter low amid a broader market sell-off during the March 2025 quarter, according to the NSE's report titled India Ownership Tracker. During the March quarter, mid- and small-cap stocks underperformed their large-cap counterparts, further amplifying valuation concerns in these segments. According to the latest analysis by domestic brokerage firm Kotak Institutional Equities, small caps led the earnings cuts, with a 6% reduction in FY2026 EPS estimates compared to a 2% cut for large caps and 3% for mid-caps. On the valuation front, the Nifty SmallCap 100 is trading at a one-year forward price-to-earnings (P/E) multiple of 27.2x—significantly higher than its long-term average and close to the Nifty MidCap 100's P/E of 28.3x. This sharp rise in valuations places the Nifty SmallCap 100 near its historical peaks, levels last seen during previous phases of overheated sentiment, such as mid-2021 and pre-2018, according to domestic brokerage firm InCred Equities. In contrast, the Nifty 50 is trading at a more reasonable 20.7x forward P/E. The narrowing valuation gap between small- and mid-cap stocks is making investors uncomfortable. Analysts believe this has prompted a shift in investor focus toward large-cap stocks. Looking ahead, analysts expect small and mid-cap stocks are likely to underperform in the short term, given their elevated valuations and absence of short-term triggers. Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, "The recent weakness in the broader market is likely to continue since they are excessively valued, and the ongoing risk-off can lead to further selling in this segment. Money may move from the overvalued SMIDs to the fairly valued, safe large caps in financials, industrials, autos, and real estate." Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
Mint
11-06-2025
- Business
- Mint
Tata Elxsi share price in focus as will trade ex-dividend today for dividend payout of ₹75 per share
Dividend Stock: Tata Elxsi share price will remain in focus on Wednesday as the stock will trade ex-dividend today, June 11. Tata Elxsi had set June 11, 2025, as the record date for identifying the list of eligible shareholders to receive the dividend. Record date for June 11 implies that the investors who wish to benefit from the dividend payout announced by the company should have bought shares of Tata Elxsi at least one day before the record date, as per T+1 settlement procedure, for their names to appear in the list of eligible shareholders to receive the dividend payout. As per a release by Tata Elxsi, dividends on shares held in physical form will be paid to members whose names are included in the Register of Members as of Wednesday, June 11, 2025, at the end of work hours. Dividends on shares held in demat form will be paid to members whose names are included in the list of beneficial owners provided by the Depositories as of Wednesday, June 11, 2025, at the end of business hours. At its meeting on April 17, 2025, the company's board of directors proposed that members approve a dividend of ₹ 75 each equity share with a face value of ₹ 10 apiece at the 36th annual general meeting. The announcement amounted to a 750% dividend considering the face value of shares. The company had announced that on Wednesday, June 25, 2025, the company's 36th Annual General Meeting (AGM) will take place by video conference or other audio-visual means. If authorised, the dividend will be paid by June 30, 2025, at the latest, after the following tax deductions are made at the source. Tata Elxsi's share price on Tuesday had closed 1.10% higher on the BSE at ₹ 6703.50. "Tata Elxsi has witnessed a strong upside in recent times which is in line with the performance seen in many of the IT names, said Gaurav Bissa VP - InCred Equities. The RSI at the current levels has entered in an overbought zone which makes buying lucrative on dips towards ₹ 6350 levels where its 200dema is likely lend a strong support and price will also retest swing breakout making risk reward lucrative for a short term trade, added Bissa
Entrepreneur
06-06-2025
- Business
- Entrepreneur
IT Services Sector Witness Lack of Urgency to Spend by Clients: InCred Equities
Clients continue to seek 'doing more for less' to optimize legacy projects to fund small-ticket AI-led ones You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Indian IT services companies are witnessing a lack of urgency to spend by clients as they remain cautious in an uncertain business environment, and are still hesitant to take long-term decisions, according to a report from InCred Equities. "But the reconciliatory stance, especially on reciprocal tariffs, has helped de-escalate the situation. Deal conversations are underway but advisory-led proposals (RFPs) with long-term road-maps have complex constructs and are elongating the decision timeframe. Pipeline opportunity could be at its peak but the pertinent question for investors is the quantum of conversion book and rate," the report said. However, enterprises are using the current uncertainty to right-size their organization/spending, given the inflationary pressure. The global conflicts have impacted client visits to Centres of Excellence (CoEs) and has elongated deal closure. The India-Pakistan conflict impacted travel plans of clients. "We heard instances of less client meetings in the month of May 2025 as travel advisory led to cancellation or postponement of visits to CoEs in India. This, in turn, added a new vector to decision-making delay, especially for global capability centre or GCC-led deals," the report said. AI-led productivity is the big elephant in the room. According to InCred Equities, the deflationary impact of artificial intelligence (AI) on revenue, led by productivity pass-back, is unlikely a near-term phenomenon. "We have been highlighting that clients continue to seek 'doing more for less' to optimize legacy projects to fund small-ticket AI-led ones. This, in turn, is driving vendor consolidation, driving the competitive intensity higher, creating staffing challenges, and pressurizing the margin profile of deals. Hence, building margin expansion for FY26F could be aggressive." As economic downturns change technology adoption and consumption patterns, this cycle is likely to favour mid-sized IT companies. The report cites similar views from CEO of Zensar Technologies who believes tier-II have the opportunity to capture incremental mind and market share as the current technology (AI) change has made the field level-playing. Infosys Chairman Nandan Nilekani alluded to the uncertain business environment in its latest annual report. "As we contemplate the developments of the last few months, we know we are in an era of uncertainty that we have never seen before. Multiple trends are colliding and leading us to reexamine the fundamentals of our businesses," he said. N. Chandrasekaran, Chairman, Tata Consultancy Services (TCS) also agreed that financial year 2025 was a year of profound global disruption. "Widespread geopolitical conflicts, military escalations, and uncertain trade dynamics severely impacted global supply chains. Over 60 nations went to the polls, stalling policy continuity and reform agendas across several key markets. As a result, businesses worldwide faced significant shocks— ranging from falling production volumes and rising costs to suboptimal asset utilization, impacting profitability and cash flows," he said in the company's latest annual report. The InCred Equities report indicated of a potential budget flush in 2H FY26F, given the current procrastination in spending, delay in decision-making and/or ramp-ups, and tepid spending pattern in 1H CY25. "That said, it may not be a true reflection of structural recovery as AI-led deflationary pressure could outweigh the near-term tailwinds, if any," the report said. The demand trend across banking, healthcare, energy, mining, and insurance verticals appear to be better than manufacturing, hi-tech, and retail. "That said, there appears to be no real urgency to spend, even within the segments having a better demand trend."
