4 support cos to acquire from Rs 21,772 cr AoNs; right here are ICICI Securities’ leading supply choices

With the Defence Acquisition Council (DAC) according Acceptance of Necessity (AoN) for 5 resources purchase propositions totaling up to Rs 21,772 crore, Bharat Electronics Ltd (BEL) is anticipated to profit one of the most as a result of route gain from EWS for Su -30 MK-I and share from nearly all the various other propositions. Astra Microwave is most likely to gain from trickle-down impact, ICICI Securities stated including that Hindustan Aeronautics Ltd (HAL) is most likely to gain from purchase of ALH (M) MR and the engine overhaul of Su -30 MK-I.

That stated, ICICI Securities does not see prompt take advantage of the existing AoNs, as the procedure from AoN to buy conversion can take a minimum of 2 years, adhered to by mobilisation duration of 12-18 months.

“Among the stocks under coverage, we see BEL likely benefitting the most due to: 1) possible award of EWS package for Su-30MKI; 2) trickle-down benefit of 20–30 per cent of value of shipbuilding orders; and 3) overhaul of electronic components and FCS of T-72, T-90 and BMPs. We envisage, Astra Microwave Products Ltd likely benefitting from EWS package, particularly Jammer pods and NGRWR,” ICICI Securities stated.

ICICI Securities stated PTC Industries Ltd might profit in engine overhaul, as the business has actually carried out an MoU with HAL’s Koraput center for the supply of crucial elements throughout the overhaul.

“Overhauls of armoured fleet – entailing mechanical, electrical and FCS revamp – are likely to benefit OFBs and other players in the defence ecosystem, as indigenisation levels are likely to be high. In case of proposals for ships, we believe that the bidding shall be competitive, as these are smaller vessels and various shipbuilders – private and DPSUs – have requisite capabilities,” it stated.

While the lately accorded AoN is among the smaller sized ones in current times, it follows a space of 3 months, which is reassuring. The AoNs accorded so far in FY25 total up to Rs 1,66,500 crore compared to Rs 3,61,000 crore and Rs 2,64,200 crore in FY24 and FY23, specifically.

“As the primary objective of the current AoNs is to augment defence preparedness, we expect ordering to follow broadly in the same direction. We expect orders for 12 (nos.) Su-30MK1 and Pinaka in the next 3–4 months. Our key picks in the defence space are Solar Industries (Target price: Rs 13,250; BUY); Azad Engineering (Target price: Rs 2,450; BUY) and PTC Industries (target price: Rs 20,070; BUY),” it stated.

Among support PSUs, ICICI Securities favors BEL and recommended a target cost of 350. On Wednesday, BEL shares were trading 0.24 percent greater at Rs 312.75.