JPMorgan bullish on defence stocks: Initiates coverage on BEL, HAL, Mazagon Dock, sees up to 17% upside

Global brokerage firm JPMorgan has expressed a positive outlook on India’s defense sector as it initiated coverage on Bharat Electronics (BEL), Hindustan Aeronautics (HAL), and Mazagon Dock Shipbuilders, signaling a growth potential of up to 17%.

JPMorgan highlighted the strong growth prospects in production and exports within the sector.

Here is what the foreign brokerage said:

BEL: Overweight | Target price: Rs 340 | Upside: 16.25%

BEL has been assigned an "Overweight" rating, with a target price set at Rs 340. The company has been identified as the preferred pick for exposure to the sector’s structural growth owing to its strong fundamentals and growth trajectory.

HAL: Overweight | Target price: Rs 5,135 | Upside: 17.2%

HAL has also received an "Overweight" rating, with a target price of Rs 5,135. The company’s significant role in defense production positions it as a key player poised to benefit from the sector’s expanding opportunities.

Mazagon Dock Shipbuilders: Neutral | Target price: Rs 4,248 | Upside: 1.7%

JPMorgan assigned a "Neutral" rating to Mazagon Dock Shipbuilders, with a target price of Rs 4,248. While the company remains an essential player in shipbuilding, the neutral stance reflects a more balanced risk-reward outlook compared to peers.

The brokerage emphasizes the "long runway of structural growth" for the defense industry, driven by increasing domestic production, government initiatives, and rising export opportunities.

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The recent correction in stock prices across the sector is viewed as an attractive entry point for investors.

This optimistic outlook highlights the sector’s resilience and potential for sustained growth amid a growing focus on indigenous defense production and technological advancements.

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