HomeAatmanirbhar BharatIndia defence industry stocks: Defense sector poised to experience CAGR of 13...

India defence industry stocks: Defense sector poised to experience CAGR of 13 per cent from FY23 to FY30: Jefferies

msid 108970900,imgsize

There is an anticipated twofold growth in domestic defence expenditure from FY24E-30E, in a development projected to shape the landscape of India’s defence sector.

According to a report by Jefferies, with an estimated domestic defence opportunity ranging between USD 100-120 billion over the next 5-6 years, the sector anticipates a visible 13 per cent industry Compound Annual Growth Rate (CAGR) from FY23 to FY30.

Although India ranks among the top three defence spenders globally, its defence expenditure in Calendar Year 2022 (CY22) merely amounted to 10 per cent of that of the United States and 27 per cent of China’s.

Despite this, India’s coastline and land area dimensions nearly match those of the US and China, indicating the substantial potential for growth and investment in its defence sector.

The focus on indigenization is expected to be a significant driver, fostering double-digit growth in domestic defence spending.

Furthermore, the export defence opportunities are projected to witness a commendable 21 per cent CAGR from FY23 to FY30, with India’s defence exports surging 16-fold from FY17 to FY24E, reaching USD 3 billion.Projections suggest this figure could ascend to USD 7 billion by FY30E, aligning with the government’s target of achieving USD 6 billion by FY29E.Data Patterns emerges as a frontrunner in the sector, boasting in-house technology and an anticipated 30 per cent+ Earnings Per Share (EPS) CAGR.

The company is poised to witness a nearly fivefold increase in revenues from FY24E to FY30E, fueled by indigenization initiatives and a robust export pipeline.

Similarly, HAL, renowned for its blend of steady service income and OEM (Original equipment manufacturer) manufacturing growth, anticipates a medium-term EPS CAGR of 22 per cent from FY24E to FY30E.

Bharat Electronics (BEL), a market leader in domestic defence electronics, is well-positioned to capitalize on the steady defence spend trajectory.

With 70-75 per cent of its revenues originating from the navy and army and the balance from the air force, BEL stands to benefit significantly from the defence opportunity.

The company’s zero debt and comfortable working capital position further fortify its position in the market.

This surge in spending is poised to catalyze stock upticks across the industry.

Jefferies has initiated coverage on key players such as Hindustan Aeronautics (HAL) and Data Patterns, endorsing a Buy rating.

Additionally, the firm maintains a positive outlook on Bharat Electronics (BEL).

In the fiscal year 2023-24, India’s defence exports surged to a record Rs 21,083 crore, marking a 32.5 per cent increase compared to the previous fiscal’s figure of Rs 15,920 crore.

This data, disclosed in a press release issued by the Ministry of Defense on Monday, underscores a substantial growth trajectory in defence exports, which have expanded by 31 times over the past decade compared to 2013-14.

The robust performance in defence exports can be attributed to concerted efforts from both the private sector and defence public sector undertakings (DPSUs).

Notably, the private sector contributed approximately 60 per cent of the total exports, while DPSUs contributed the remaining 40 per cent.

Furthermore, the number of export authorizations issued to defence exporters witnessed a notable increase in 2023-24. From 1,414 export authorizations in the preceding fiscal year, the figure surged to 1,507 during the reported period, as per the ministry’s data.

The escalating global geopolitical tensions coupled with India’s steadfast focus on achieving self-reliance have paved the way for a substantial increase in order flow and revenue growth for domestic defense companies.

Moreover, the Indian government’s concerted efforts to bolster country-to-country relations aimed at promoting exports add another layer of buoyancy to the sector’s prospects.

Despite these projections, certain risks loom over the sector, including technology obsolescence and management bandwidth constraints.

However, with prudent strategies and robust government support, India’s defence sector appears poised for exponential growth, driving both economic and strategic advancements in the foreseeable future.



Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Aatmanirbhar Bharat


HAL, NAL sign tech transfer pact for Tejas engine day door production

Bengaluru: Defence PSU Hindustan Aeronautics Ltd (HAL) said on Monday it has signed a Transfer of Technology agreement with National Aerospace Laboratories for the...

Military spending: India fourth-largest military spender, overall global spending accelerates: SIPRI report

India was the fourth largest military spender globally in 2023, a leading conflict think-tank said on Monday. At $83.6 billion, the country’s military expenditure...

AMCA 5th Generation Stealth Fighter Updates

AMCA to be integrated with sophisticated indigenous Distributed Aperture System (DAS) that making it a formidable air asset for the Indian Air Force

Source : IgMp Bureau India’s Advanced Medium Combat Aircraft (AMCA) is on the brink of a revolutionary transformation with the integration of a sophisticated Distributed...

AMCA to incorporate the best features of both 5th and 6th Generation fighters: ADA sources

Source : IgMp Bureau India's strides toward indigenous air dominance receive a substantial boost with the green signal for the Advanced Medium Combat Aircraft (AMCA)...

Most Popular

Recent Comments

Archive Months


Delegation Visit and Aerospace and Defence Roundtable in Bengaluru highlights Tamil Nadu’s strengths

Under the leadership of Dr. T.R.B. Rajaa, Minister for Industries, Investment Promotion, and Commerce, Govt. of Tamil Nadu, a high-level delegation convened meetings with...

Islamic Intolerance: Norwegian leader Lars Thorsen car rammed while trying to burn a copy of Quran

Source : Asian News International (ANI)Norwegian leader Lars Thorsen car rammed. (Twitter/Sian)Oslo: Norwegian leader Lars Thorsen car was rammed while he was trying to...

India intends to produce the Vympel R-73E missile for MiG-29/Su-30

https://www.defencenews.in/2023/11/india-intends-to-produce-the-vympel-r-73e-missile-for-mig-29-su-30/https%3A%2F%2Fwww.defencenews.in%2F2023%2F11%2Findia-intends-to-produce-the-vympel-r-73e-missile-for-mig-29-su-30%2F The Indian Air Force operates an impressive assembly of aircraft, not limited to the MiG-21 β€˜Bison’, MiG-29, and Su-30MKI. These military aircraft serve...

Indian Air Force Grounds entire MiG-21 Fleet After Rajasthan Crash

Source : Outlook India Indian Air Force Grounds entire MiG-21 Fleet After Rajasthan Crash Two weeks after a MiG-21 fighter plane crashed in Rajasthan, the Indian...
error: Content is protected !!