JP Morgan gives share price targets for three defense stocks Mazagon Dock, HAL, BEL

Brokerage analysts, JPMorgan has reportedly initiated 'overweight' on Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL) and a Neutral rating on Mazagon Dock Shipbuilders following the recent correction. Shares of HAL are down 24.39 percent from their 52-week high of Rs 5,675.

Mazagon Dock shares are low by 28.73 percent from a 52-week high of Rs 5,859.95 while those of BEL are down 14 percent from a recent high of Rs 292.45.

JPMorgan said the recent stock market correction is an opportunity, given there is a long runaway of structural growth ahead. It sees strong growth in defense production and exports. The brokerage said BEL is its preferred pick for exposure to structural growth.

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JPMorgan reportedly suggested a target price of Rs 340 for BEL, Rs 5,135 for HAL, and Rs 4,248 for Mazagon Dock. These target prices suggest 16 percent upside potential each for BEL, 20 percent for HAL, and 1.7 percent for Mazagon Dock.  

"We expect BEL revenue to grow at 19 percent CAGR over FY24-27, driven by improved market share on account of enhanced wallet share and improved indigenized offerings. We maintain our estimates and continue to value the company at 35x two-year forward earnings," the brokerage said post BEL's Q2 results. 

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In the case of HAL, ICICI Securities in a November 15 note said its channel checks indicated GE Aerospace was still facing supply-chain disruption and is collaborating with HAL for delivery schedule. 

"HAL is expected to receive at least two GE-404 engines per month starting November. The steady flow of engines is essential for HAL to accelerate the production pace for Tejas Mk-1A. Currently, the company can manufacture 24 jets per annum. We would keep a close tab on the commencement of engine deliveries," it said.

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