Nomura Identifies Top Defence Stocks to Watch Amid Rs 1 Lakh Crore Approval Boost

Nomura expects Rs 1 lakh crore defence projects to boost domestic companies. Bharat Electronics, Larsen & Toubro, and defence shipyards are top picks. The brokerage highlights approvals for QRSAM and Mine Countermeasure Vessel projects, with potential contracts for BEL and Goa Shipyard. Nomura sees these decisions as a positive step for India's defence sector and manufacturing capabilities.

India's defence sector has received a significant boost with the approval of Rs 1 lakh crore worth of projects, according to Nomura. The brokerage firm has identified key beneficiaries among domestic companies, highlighting the potential for growth in the sector. The approvals, which fall under the Buy – Indian (Indigenously Designed, Developed and Manufactured or IDDM) category, aim to enhance the operational capabilities of the armed forces.

One of the most notable approvals is for the Quick Reaction Surface-to-Air Missile (QRSAM) system, estimated at Rs 30,000 crore. Bharat Electronics (BEL) is expected to win this contract, which could be finalized by the end of 2025. The QRSAM is designed for rapid deployment and can engage multiple targets from a single platform. Nomura sees this as a positive step for BEL, which is responsible for the command and control systems, radars, and tracking modules of the QRSAM.

Another key project is the revival of the long-delayed Mine Countermeasure Vessel (MCMV) program. A formal Request for Proposal (RFP) will be issued to Indian shipyards, including Goa Shipyard, which is expected to be involved in the project. Nomura has a positive outlook on Goa Shipyard, given its likely involvement in the MCMV project.

Nomura has identified Bharat Electronics, Larsen & Toubro, and Bharat Dynamics as key beneficiaries of the recent policy approvals. BEL is likely to win the QRSAM order due to its extensive role in radar, command systems, and fire-control equipment. Larsen & Toubro plays a key role in the QRSAM project by supplying the missile launch systems. Bharat Dynamics, while not rated by Nomura, is the primary missile manufacturer for the QRSAM program and could see significant subcontracting orders.

The approvals are likely to enhance mobility, air defence, supply chain systems, and overall operational preparedness of the armed forces. Nomura sees these decisions as a positive step for India's defence sector and manufacturing capabilities.

References:
[1] https://www.financialexpress.com/market/the-rs-1-lakh-crore-defence-play-nomuras-top-picks-may-surprise-you-3906394/
[2] https://economictimes.indiatimes.com/news/defence/warships-missiles-and-spy-planes-indian-armed-forces-set-to-get-another-rs-1-lakh-crore-boost-heres-whats-coming/articleshow/122245273.cms
[3] https://economictimes.indiatimes.com/markets/stocks/news/defence-stocks-icici-securities-sees-over-15-revenue-growth-hal-bel-4-others-on-radar/articleshow/122293874.cms