4 Stocks To Buy From The Defence Space For Solid Returns

Broking firm Prabhudas Lilladher's analysts recently visited the Defence Expo 2022 in Gandhinagar, Gujarat, which was centered around investments in MSMEs, startups, technological developments, government support & initiatives, export opportunities and futuristic technology for defence production.

Defence industry at inflection point

According to Prabhudas Lilladher, the Indian defence industry is at an inflection point, which is poised for rapid growth led by government's thrust on indigenization and likely to grow by double digit over next 5-6 years. MSMEs and startups are also expected to strengthen the supply chain of Indian defence sector. "We remain positive on overall defence sector and defence companies like BEL, HAL, BDL, Data Patterns etc," the brokerage has said.

Stocks to buy from the defence space

Name of the stock to buy	Stock Recommendation
Bharat Electronics	Buy
HAL	Not rated
Bharat Dynamics	Not rated
Data Patterns	Not rated
Cochin Shipyard	Not rated

The stock of Bharat Electronics last closed at Rs 103, while HAL closed at Rs 1403 on the National Stock Exchange. Cochin Shipyard which is also good on dividend yields closed at Rs 518 on the BSE.

Focus on developing investment ecosystem to support startups and MSMEs

According to Prabhudas Lilladher, with a view to make India Atmanirbhar, Government has taken various initiative such as Technology Development Fund (TDF) and IDEX to support MSMEs and defence startups to boost technology development. TDF provides startups with fund for specific solution based project development. "Limit under TDF has been enhanced to Rs500mn vs Rs100mn earlier. Industry experts suggests 1) venture capital should start investing in Indian defence startups 2) DPSU/DRDO to support MSMEs & startup and 3) large OEMs to partner with startups to support product development and manufacturing process. With a view to support and create vibrant defence ecosystem in next 5-6 years, DRDO will assist and mentor startups and MSMEs," the brokerage has said.