Stocks to buy: After struggling under the sell-off heat for almost three months, defensive stocks saw a significant retreat during Friday’s trading. The price of shares at Mazagon Dock Shipbuilders soared over 7%, while shares at Cochin Shipyard climbed 10% and locked in the upper circuit.
During this retreat bounce, shares of ideaForge, Larsen & Turbo (LT), Bharat Dynamics, BHEL, and other companies had increases of more than 2%. The question of whether or not Indian defense stocks are experiencing a renaissance has been sparked by this increase in the market.
According to stock market experts, it would take more sessions to ascertain whether the mojo in defence stocks is back. However, some defence stocks are available at attractive valuations, and one can start accumulating select ones.
They said that most of the defence stocks are PSUs and have rallied a lot in recent years. So, firm selling was expected in defence stocks, and base-building mode can’t be written off in a single pullback.
Manish Chowdhury, Head of Research at StoxBox, discussed the prognosis for Indian defense companies, saying, “Our sense is that valuation in select pockets has become reasonable vis-à-vis historical trends, though it is too early to conclude that the pain is over for the overall defence sector.”
When looking at companies for the next 12 to 18 months, we suggest building up a position in the defense industry. We believe that the strong order books of these businesses, the increased emphasis on indigenization, and the expanding export potential would all continue to support the industry as a whole.
For these companies to maintain their current valuation, they would need to execute the order book, and any missed profit targets or delayed contract wins might further hurt the overall