Bharat Dynamics (BDL) was the top gainer in the defence pack as it rallied as much as 12 per cent to hit a fresh 52-week high at Rs 976.20. The stock pared much of the gains later on but was still up around 6 per cent in the afternoon session.
Shares of
rallied up to 9.4 per cent to hit a record high at Rs 457.50. Cochin Shipyard stock also rallied around 9 per cent to scale to a fresh peak of Rs 408.40.
Domestic benchmark equity index Sensex, on the other hand, crashed nearly 1,200 points or about 2 per cent.
Defence stocks have been rallying in the last few months on the back of their strong order books and export potential amid the government’s increasing thrust on indigenisation. Analysts also find the valuations comfortable as some of the defence stocks are still trading below 20x TTM PEs.
“Going ahead, we see strong revenue visibility for the defence companies looking at the strong order book (at 3-4x TTM revenues for
, & BDL while it is at 6-7x for Cochin Shipyard, Mazagon Dock and about 12x for ). Moreover, there is a healthy pipeline of orders that gives more comfort on a longer-term basis,” domestic brokerage ICICIdirect had said in a recent note.
Independent market advisor Sandip Sabharwal, however, warns against buying defence stocks at any price. “We need to let them settle down. If the market corrects overall, we could see them correct also. They have become the favourites of traders and retail investors in the short run, but on corrective moves, investors should definitely allocate,” he said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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