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Time of India
17-07-2025
- Business
- Time of India
₹1,700 Cr Sell-Off: Is India's Defence Boom Overheating?
India's defence stocks are flashing red. Mutual funds have offloaded a massive ₹1,700 crore across top names like Solar Industries, Bharat Forge, Zen Technologies, and more, signaling deep concerns over valuation and execution a 3-month rally of up to 84% post-Operation Sindoor, the sector is now facing a reality check. Even institutional bulls like Kotak AMC and Motilal Oswal are tapping the brakes. So, is the defence dream fading — or just recalibrating?In this video, we break down:Why mutual funds are exitingWhich stocks are under pressureWhat experts like Vikas Khemani and Ambareesh Baliga are warningThe long-term opportunity still intactShould you sell, hold, or SIP into defence now? Let's decode. Show more Show less
Economic Times
16-07-2025
- Business
- Economic Times
Mutual funds cut Rs 1,700 crore exposure in 9 defence stocks. Too expensive to buy or smart exit?
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Their top picks in the space are BEL and Data Patterns. The multi-billion-dollar boom in defence stocks is showing signs of a slowdown, as mutual funds offloaded a staggering Rs 1,700 crore across nine defence stocks last month — a signal that even the smartest money managers believe valuations have turned dangerously expensive after the post-Operation Sindoor the positive news around increased defence spending following Operation Sindoor , coupled with NATO's defence spending targets creating a double-barrelled opportunity in both domestic and export markets, has now pushed valuations into uncomfortable territory. This has prompted institutional investors to hit the exit selling spree was broad-based, with Solar Industries bearing the brunt with outflows of Rs 952 crore, followed by Zen Technologies at Rs 192 crore and Bharat Forge at Rs 165 crore. GRSE saw selling worth Rs 153 crore, while Cochin Shipyard faced outflows of Rs 120 crore, and Mazagon Dock witnessed exits of Rs 96 crore, according to estimates by Prime Database. Total gross selling stood at approximately Rs 1,713 stark contrast, buying was limited to a meagre Rs 100 crore across seven stocks, including Bharat Dynamics, Unimech, and sell-off has been reflected in share prices, with the Nifty India Defence Index falling around 4% over the past month. GRSE, Astra Microwave, and Cochin Shipyard have reported double-digit losses, while Solar Industries is down 9% and HAL has shed around 3%, underscoring the broad-based nature of the concerns are now front and center, as even the sector's most vocal cheerleaders are beginning to pump the brakes.'We have been avoiding a lot of defence plays... those are the places where we are finding a little bit of overenthusiasm in the marketplace and among market participants,' said Vikas Khemani of Carnelian Asset Management, highlighting the frothy sentiment gripping the caution reflects a broader shift in institutional thinking. "It is not that tomorrow if we find an interesting company where the risk-reward is there, we will be buying those segments also, so I am not making a broad judgment that we will not do anything, but it is just that those are the places where we are finding a little bit of overenthusiasm in the marketplace and market participants," he added, suggesting that selectivity, not blanket avoidance, is the new warning signs are flashing red across the sector, with execution risks emerging as the new worry. Ambareesh Baliga sounded the alarm on what many investors are overlooking: "In fact, I am finding the valuations are a bit expensive at this point of time... the issue would be on delivery, on execution, which not too many people are talking about. They have got huge orders, but how will they execute? I think that is the big issue."Baliga's concerns are particularly acute for the medium term. "The issue is mostly on the defence side of the market because quite a few of them have got order books full for the next six-eight years, and if they are not able to increase their capacity and deliver, that is where the issue would happen," he pointed to HAL as an early warning: "We have already seen that happening in HAL to some extent, that we should see across the other companies." This suggests that the order book visibility that investors have been celebrating could become a liability if companies can't scale up operations to meet recent downgrade of BDL by Motilal Oswal further weighed on sentiment, serving as a wake-up call for investors who had been riding the momentum. The brokerage initiated coverage on Bharat Dynamics with a 'neutral' rating and Rs 1,900 target price, nearly 4% below its then market value, citing "lofty valuations."While the brokerage applauded BDL's strong order pipeline and export growth, it noted that the stock's sharp run-up leaves "little room for near-term upside." The brokerage stated it would "look for lower price points to enter the stock," essentially telling investors to wait for a correction before jumping cautious stance is becoming more common among institutional investors. Even seasoned bulls are turning cautious. Harsha Upadhyaya, CIO-Equity at Kotak AMC, who has been a long-term believer in the defence story, admitted: "While valuations are on the higher side, we are not increasing our position at this point of time... however, in the short term yes, the valuations are on the higher side so one needs to have a little bit of caution."Upadhyaya's comments are particularly significant because Kotak AMC has been building defence positions since the government started focusing on indigenization. "We have been very positive on defence for quite some time now, and we started building our positions when the government started to focus on indigenization, and also larger investments continue to happen into defence," he said, making his current caution all the more easing of tensions in the Middle East, particularly between Israel and Iran, had already begun to dampen sentiment, as geopolitical risks that had supported defence stocks started to the near-term turbulence, the structural story remains compelling for those willing to look beyond the current valuation concerns. The macro backdrop, including NATO's 5% defence spending target by 2035 and recent Defence Acquisition Council approvals worth Rs 1 trillion, continues to provide a solid foundation for long-term remains bullish on the sector's long-term prospects, particularly favoring the Defence Electronics segment: "We prefer the Defence Electronics segment, which shall grow 2–3x of defence budget outlay (7–8% CAGR over next five years) powered by the dual engines of ongoing modernisation and higher localisation content for larger programs in the pipeline for Air Force and Navy."Nuvama highlighted that "over the past three decades, India's defence spending growth rate has been among the highest (~8%) across global defence superpowers due to import embargoes and growing export potential." This translates to an estimated $130 billion opportunity over the next five to seven catalysts remain strong despite valuation concerns. Following Operation Sindoor, the government has approved Rs 400 billion for emergency procurement to fast-track military purchases, with the Ministry of Defence recently clearing emergency procurement worth Rs 20 billion for various platforms. Additionally, the Defence AcquisitionCouncil has approved Acceptance of Necessity (AoN) for 10 proposals amounting to Rs 1,050 Securities expects robust order inflows in FY26, with most companies under its coverage guiding for revenue growth of over 15%. Some, like BDL, Solar Industries, and Azad Engineering, have projected even higher growth in the range of 25–30%.Among its top picks, ICICI Securities lists Solar Industries, Astra Microwave, and Azad Engineering in the private space. Among DPSUs, it prefers HAL, BEL, and the valuation challenge remains very real. Nuvama noted that 'Indian defence stocks across the spectrum have re-rated explosively over the past two to three years on the back of improved visibility,' with 'most private defence stocks now trading at a premium to DPSUs, given their higher earnings CAGR and superior return profile.'For retail investors caught in the crossfire, Aamar Deo Singh, Sr. VP – Research at Angel One, offered practical advice: 'Defence stocks have witnessed a spectacular rally, and post the India-Pakistan conflict, this sector has once again taken off, with some stocks hitting record highs and trading at expensive valuations. So, it would be wise not to invest all at once in this sector. Adopting an SIP approach over the long term would deliver better results.'As the dust settles, the defence sector stands at a crossroads — caught between compelling long-term growth drivers and stretched near-term valuations that have even the most bullish investors hitting the pause button.
Time of India
16-07-2025
- Business
- Time of India
Mutual funds dump Rs 1,700 crore in 9 defence stocks. Too expensive to buy or smart exit?
The multi-billion-dollar boom in defence stocks is showing signs of a slowdown, as mutual funds offloaded a staggering Rs 1,700 crore across nine defence stocks last month — a signal that even the smartest money managers believe valuations have turned dangerously expensive after the post-Operation Sindoor rally. All the positive news around increased defence spending following Operation Sindoor , coupled with NATO's defence spending targets creating a double-barrelled opportunity in both domestic and export markets, has now pushed valuations into uncomfortable territory. This has prompted institutional investors to hit the exit button. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Gold Is Surging in 2025 — Smart Traders Are Already In IC Markets Learn More Undo The selling spree was broad-based, with Solar Industries bearing the brunt with outflows of Rs 952 crore, followed by Zen Technologies at Rs 192 crore and Bharat Forge at Rs 165 crore. GRSE saw selling worth Rs 153 crore, while Cochin Shipyard faced outflows of Rs 120 crore, and Mazagon Dock witnessed exits of Rs 96 crore, according to estimates by Prime Database. Total gross selling stood at approximately Rs 1,713 crore. In stark contrast, buying was limited to a meagre Rs 100 crore across seven stocks, including Bharat Dynamics, Unimech, and BEL. Also Read | Defence stocks retreat after up to 84% rally in 3 months. Is it time to book profits or hold? Live Events The sell-off has been reflected in share prices, with the Nifty India Defence Index falling around 4% over the past month. GRSE, Astra Microwave, and Cochin Shipyard have reported double-digit losses, while Solar Industries is down 9% and HAL has shed around 3%, underscoring the broad-based nature of the correction. Valuation concerns are now front and center, as even the sector's most vocal cheerleaders are beginning to pump the brakes. 'We have been avoiding a lot of defence plays... those are the places where we are finding a little bit of overenthusiasm in the marketplace and among market participants,' said Vikas Khemani of Carnelian Asset Management, highlighting the frothy sentiment gripping the sector. Khemani's caution reflects a broader shift in institutional thinking. "It is not that tomorrow if we find an interesting company where the risk-reward is there, we will be buying those segments also, so I am not making a broad judgment that we will not do anything, but it is just that those are the places where we are finding a little bit of overenthusiasm in the marketplace and market participants," he added, suggesting that selectivity, not blanket avoidance, is the new mantra. The warning signs are flashing red across the sector, with execution risks emerging as the new worry. Ambareesh Baliga sounded the alarm on what many investors are overlooking: "In fact, I am finding the valuations are a bit expensive at this point of time... the issue would be on delivery, on execution, which not too many people are talking about. They have got huge orders, but how will they execute? I think that is the big issue." Baliga's concerns are particularly acute for the medium term. "The issue is mostly on the defence side of the market because quite a few of them have got order books full for the next six-eight years, and if they are not able to increase their capacity and deliver, that is where the issue would happen," he warned. Baliga pointed to HAL as an early warning: "We have already seen that happening in HAL to some extent, that we should see across the other companies." This suggests that the order book visibility that investors have been celebrating could become a liability if companies can't scale up operations to meet demand. The recent downgrade of BDL by Motilal Oswal further weighed on sentiment, serving as a wake-up call for investors who had been riding the momentum. The brokerage initiated coverage on Bharat Dynamics with a 'neutral' rating and Rs 1,900 target price, nearly 4% below its then market value, citing "lofty valuations." While the brokerage applauded BDL's strong order pipeline and export growth, it noted that the stock's sharp run-up leaves "little room for near-term upside." The brokerage stated it would "look for lower price points to enter the stock," essentially telling investors to wait for a correction before jumping in. This cautious stance is becoming more common among institutional investors. Even seasoned bulls are turning cautious. Harsha Upadhyaya, CIO-Equity at Kotak AMC, who has been a long-term believer in the defence story, admitted: "While valuations are on the higher side, we are not increasing our position at this point of time... however, in the short term yes, the valuations are on the higher side so one needs to have a little bit of caution." Upadhyaya's comments are particularly significant because Kotak AMC has been building defence positions since the government started focusing on indigenization. "We have been very positive on defence for quite some time now, and we started building our positions when the government started to focus on indigenization, and also larger investments continue to happen into defence," he said, making his current caution all the more noteworthy. The easing of tensions in the Middle East, particularly between Israel and Iran, had already begun to dampen sentiment, as geopolitical risks that had supported defence stocks started to recede. Despite the near-term turbulence, the structural story remains compelling for those willing to look beyond the current valuation concerns. The macro backdrop, including NATO's 5% defence spending target by 2035 and recent Defence Acquisition Council approvals worth Rs 1 trillion, continues to provide a solid foundation for long-term growth. Nuvama remains bullish on the sector's long-term prospects, particularly favoring the Defence Electronics segment: "We prefer the Defence Electronics segment, which shall grow 2–3x of defence budget outlay (7–8% CAGR over next five years) powered by the dual engines of ongoing modernisation and higher localisation content for larger programs in the pipeline for Air Force and Navy." Their top picks in the space are BEL and Data Patterns. Also Read | Defence stocks decline as investors reassess valuations amid profit booking Nuvama highlighted that "over the past three decades, India's defence spending growth rate has been among the highest (~8%) across global defence superpowers due to import embargoes and growing export potential." This translates to an estimated $130 billion opportunity over the next five to seven years. Immediate catalysts remain strong despite valuation concerns. Following Operation Sindoor, the government has approved Rs 400 billion for emergency procurement to fast-track military purchases, with the Ministry of Defence recently clearing emergency procurement worth Rs 20 billion for various platforms. Additionally, the Defence Acquisition Council has approved Acceptance of Necessity (AoN) for 10 proposals amounting to Rs 1,050 billion. ICICI Securities expects robust order inflows in FY26, with most companies under its coverage guiding for revenue growth of over 15%. Some, like BDL, Solar Industries, and Azad Engineering, have projected even higher growth in the range of 25–30%. Among its top picks, ICICI Securities lists Solar Industries, Astra Microwave, and Azad Engineering in the private space. Among DPSUs, it prefers HAL, BEL, and Midhani. However, the valuation challenge remains very real. Nuvama noted that 'Indian defence stocks across the spectrum have re-rated explosively over the past two to three years on the back of improved visibility,' with 'most private defence stocks now trading at a premium to DPSUs, given their higher earnings CAGR and superior return profile.' For retail investors caught in the crossfire, Aamar Deo Singh, Sr. VP – Research at Angel One, offered practical advice: 'Defence stocks have witnessed a spectacular rally, and post the India-Pakistan conflict, this sector has once again taken off, with some stocks hitting record highs and trading at expensive valuations. So, it would be wise not to invest all at once in this sector. Adopting an SIP approach over the long term would deliver better results.' As the dust settles, the defence sector stands at a crossroads — caught between compelling long-term growth drivers and stretched near-term valuations that have even the most bullish investors hitting the pause button.
Economic Times
16-06-2025
- Business
- Economic Times
Buying the fear? Check out top stock ideas of best performing PMS funds of May
While the Iran-Israel conflict may have made stock market outlook wobbly in the near term, all past dips eventually get bought into, creating crisis opportunities for long-term investors. Top performing PMS fund managers have made sizable bets on stocks like Precision Camshafts, Hitachi Energy India, and Nuvama Wealth Management as geopolitical fears create entry points in quality names. ADVERTISEMENT 'Any correction coming would be an opportunity,' said Vikas Khemani of Carnelian Asset Management. 'India's earnings growth this year will be very robust, thanks to RBI easing, low inflation, and credit growth. I don't see a major risk, though the short term is hard to call.' Leading the pack is NAFA Asset Managers' Clean Tech Portfolio, which returned a stellar 16.01% in May, the highest among PMS peers. The fund is riding hard on industrial and energy transition plays — with Precision Camshafts (18.37%), Hitachi Energy India (18.03%), and Linde India (11.82%) commanding hefty allocations. This portfolio is essentially a powertrain of cleantech conviction, according to data sourced from PMS Bazaar. Negen Capital's Special Situations & Technology Fund, up 15.35%, isn't far behind. Its top holdings include Camlin Fine Sciences, Nuvama Wealth, and HEG Ltd, reflecting a tilt toward platform plays and special situation beneficiaries. Interestingly, Nuvama Wealth Management — a capital markets business — features in three top-performing PMS portfolios this month.'We have a significant allocation to the capital markets story — AMCs, brokerages, exchanges,' said Siddharth Vora of PL Asset Management. 'It's a structural story, but we are not structural participants. We'll stay as long as the quantitative triggers remain.'One of the month's more repeated names is Interarch Building Products, showing up in four portfolios — including Accelt, Bonanza, Waya, and Anand Rathi. It's a quiet favourite among PMS managers riding the infra and pre-engineered buildings theme. ADVERTISEMENT Among small-cap plays, Nine Rivers Capital's Aurum Small Cap Opportunities delivered a solid 14.4%, thanks to high-conviction allocations to Intellect Design Arena (9.6%), Astra Microwave, and CCL Products — the latter also held by Ambit Investment's Emerging Giants PMS manager with twin strategies in the top 10 — Samvitti Capital — is doubling down on mid-cap manufacturers and pharma exporters, including Kaynes Technology, Force Motors, Strides Pharma, and Gokaldas Exports, all of which appear in both its Aggressive Growth and Active Alpha portfolios. ADVERTISEMENT Blue Jet Healthcare, a relatively new pharma listing, has found favour with both Accelt and Waya, while Camlin Fine Sciences, TD Power Systems, and Shankara Building Products show up in PMS strategies with more than 13% monthly returns. 'We expect markets to pause after the ~10% Nifty rally,' said Seshadri Sen of Emkay Global. 'Valuations are stretched, and if Middle East tensions escalate, a sell-off is possible. But we remain positive on discretionary, tech, and materials for the medium term.' ADVERTISEMENT Despite the nerves, fund managers remain anchored in India's structural story — and they're placing their bets accordingly. From precision auto parts and building solutions to electronics, pharma, and financial services, this month's PMS portfolios offer a snapshot of what smart money believes will ride out the global Stanley noted in its recent India strategy that this is likely to be a 'stock pickers' market,' adding: 'We are capitalization agnostic.' ADVERTISEMENT With that in mind, for investors looking to buy the fear, these stocks might just be your roadmap. Also Read | Rs 1 lakh gold, $78 oil, 1,300 point Sensex crash: Israel's Friday the 13th bombshell (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Time of India
16-06-2025
- Business
- Time of India
Buying the fear? Check out top stock ideas of best performing PMS funds of May
While the Iran-Israel conflict may have made stock market outlook wobbly in the near term, all past dips eventually get bought into, creating crisis opportunities for long-term investors. Top performing PMS fund managers have made sizable bets on stocks like Precision Camshafts , Hitachi Energy India , and Nuvama Wealth Management as geopolitical fears create entry points in quality names. 'Any correction coming would be an opportunity,' said Vikas Khemani of Carnelian Asset Management. 'India's earnings growth this year will be very robust, thanks to RBI easing, low inflation, and credit growth. I don't see a major risk, though the short term is hard to call.' by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Live Comfortably: 60 m² Prefab Bungalow for Seniors in Sidi Bel Abbes Pre Fabricated Homes | Search Ads Search Now Undo Leading the pack is NAFA Asset Managers' Clean Tech Portfolio, which returned a stellar 16.01% in May, the highest among PMS peers. The fund is riding hard on industrial and energy transition plays — with Precision Camshafts (18.37%), Hitachi Energy India (18.03%), and Linde India (11.82%) commanding hefty allocations. This portfolio is essentially a powertrain of cleantech conviction, according to data sourced from PMS Bazaar. Negen Capital's Special Situations & Technology Fund, up 15.35%, isn't far behind. Its top holdings include Camlin Fine Sciences, Nuvama Wealth, and HEG Ltd, reflecting a tilt toward platform plays and special situation beneficiaries. Interestingly, Nuvama Wealth Management — a capital markets business — features in three top-performing PMS portfolios this month. 'We have a significant allocation to the capital markets story — AMCs, brokerages, exchanges,' said Siddharth Vora of PL Asset Management. 'It's a structural story, but we are not structural participants. We'll stay as long as the quantitative triggers remain.' Live Events One of the month's more repeated names is Interarch Building Products, showing up in four portfolios — including Accelt, Bonanza, Waya, and Anand Rathi. It's a quiet favourite among PMS managers riding the infra and pre-engineered buildings theme. Among small-cap plays, Nine Rivers Capital's Aurum Small Cap Opportunities delivered a solid 14.4%, thanks to high-conviction allocations to Intellect Design Arena (9.6%), Astra Microwave, and CCL Products — the latter also held by Ambit Investment's Emerging Giants portfolio. Another PMS manager with twin strategies in the top 10 — Samvitti Capital — is doubling down on mid-cap manufacturers and pharma exporters, including Kaynes Technology, Force Motors, Strides Pharma, and Gokaldas Exports, all of which appear in both its Aggressive Growth and Active Alpha portfolios. Blue Jet Healthcare, a relatively new pharma listing, has found favour with both Accelt and Waya, while Camlin Fine Sciences, TD Power Systems, and Shankara Building Products show up in PMS strategies with more than 13% monthly returns. 'We expect markets to pause after the ~10% Nifty rally,' said Seshadri Sen of Emkay Global . 'Valuations are stretched, and if Middle East tensions escalate, a sell-off is possible. But we remain positive on discretionary, tech, and materials for the medium term.' Despite the nerves, fund managers remain anchored in India's structural story — and they're placing their bets accordingly. From precision auto parts and building solutions to electronics, pharma, and financial services, this month's PMS portfolios offer a snapshot of what smart money believes will ride out the global storm. Morgan Stanley noted in its recent India strategy that this is likely to be a 'stock pickers' market,' adding: 'We are capitalization agnostic.' With that in mind, for investors looking to buy the fear, these stocks might just be your roadmap. Also Read | Rs 1 lakh gold, $78 oil, 1,300 point Sensex crash: Israel's Friday the 13th bombshell ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
