Edelweiss Securities says market is looking at 12-15 per cent growth in defence allocation.
NEW DELHI: Army chief Bipin Rawat believes muscular approach isn't that bad a thing.
He recently told media that if asked, Indian Army was ready to cross the border for any operation. With eyes on China and Pakistan, and fresh engagements with Israel and the US, the government could increase defence allocation by 8-10 per cent this Budget.
Brokerage Edelweiss Securities noted that the market is looking at 12-15 per cent growth in defence allocation to Rs 97,000-99,000 crore after 3-4 years of stagnant capex allocation.
But the brokerage expects a reasonable 8 per cent rise in capital allocation for the sector, which is still higher than 6.2 per cent rise in allocation in the last Budget. Sharekhan sees a 7-9 per cent rise in capital expenditure for defence.
A scale back in defence capex has been among important levers for the government in recent years, which may be reaching their limits now, Edelweiss said, adding that the focus could be on supporting domestic defence companies, given the government's intent to cut import content gradually.
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Brokerage IIFL Wealth Management believes there is high probability of the government raising capital expenditure on defence projects and expects Bharat Electronics (BEL), Larsen & Toubro (L&T) and Bharat Forge to be in focus.
A surge in allocation for railway and capital expenditure on metros may aid companies such as Siemens, KEC, Kalapataru and ABB, it said.
Brokerage Kotak Securities assumes a growth of 6 per cent to around Rs 3,00,000 crore in capital expenditure in FY2019 with a 10 per cent increase in defence expenditure.
