Phillip Capital Bullish on Defence Stocks, Sees Up to 112% Upside

Brokerage firm Phillip Capital has issued a bullish outlook on Indian defence stocks, citing attractive valuations, strong order books, and robust growth potential. The firm has given buy ratings on several stocks, forecasting potential upsides between 23% and 112%.

Stock-wise Analysis & Price Targets

1. Bharat Electronics Ltd. (BEL)

✔ Phillip Capital Target: ₹390 (41% upside)
✔ Current Market Price: ~₹277
✔ Catalyst: Finalisation of ₹12,000 crore orders by March-end
✔ Order Backlog: ₹71,200 crore
✔ Industry Position: Market leader in defence electronics

Phillip Capital believes BEL will achieve its FY25 order inflow guidance of ₹25,000 crore if it secures these deals.

2. Hindustan Aeronautics Ltd. (HAL)

✔ Phillip Capital Target: ₹5,500 (60% upside)
✔ Current Market Price: ~₹3,437
✔ Catalyst: Expected GE 404 engine deliveries starting this or next month

HAL continues to be a leading player in aircraft and defence equipment manufacturing, with steady order execution and revenue growth potential.

3. Data Patterns Ltd.

✔ Phillip Capital Target: ₹3,400 (112% upside)
✔ Current Market Price: ~₹1,600
✔ Catalyst: Strong radar portfolio, robust order pipeline

Data Patterns is a vertically integrated defence electronics company with significant growth potential, leading Phillip Capital to value it at 50x FY27 EPS compared to its current valuation of 22x EPS.

4. Bharat Dynamics Ltd. (BDL)

✔ Phillip Capital Target: ₹1,400 (23% upside)
✔ Current Market Price: ~₹1,138
✔ Catalyst: Resolved supply chain issues, ₹3,000 crore revenue target

BDL was the best-performing stock on the Nifty Midcap index this week, gaining 17%.

5. Solar Industries Ltd.

✔ Phillip Capital Target: ₹12,000 (27% upside)
✔ Current Market Price: ~₹9,450
✔ Catalyst: Increasing defence and ammunition demand

Why Defence Stocks Are Rising

✔ Global Defence Spending Boost:

• European nations are ramping up defence budgets amid rising geopolitical risks.
• France’s Macron proposed a €200 billion EU fund for defence investments.

✔ India’s Growing Defence Exports:

• FY24 defence exports surged 32.5% to ₹21,000 crore.
• India now exports to over 100 countries, with top buyers being the US, France, and Armenia.

With strong order pipelines, rising global defence budgets, and India's booming exports, Phillip Capital expects a significant upside in defence stocks. As orders materialize and earnings visibility improves, these stocks could continue to outperform the broader market in the coming months.

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