Bharat Forge, BEL good bets in auto components space: Neeraj Deewan

In a chat with ET Now, Neeraj Deewan, Director, Quantum Securities,shares his views on Bharat Forge, BEL.

ET Now: The last maybe five off days or maybe 10 odd days we have seen two distinct themes play out and couple of stocks converge on both, defence as well as auto components. Auto components with a bit of defence story attached to them have found market's liking. What is your view and what do you like within this pocket?

Neeraj Deewan: Companies like Bharat Forge, BEL have the capacities and they can deliver once their order flow improves. Also, when capacity utilisations go up, the margins really improve a lot for these companies. For Bharat Forge definitely defence is one sector where we see fresh scope of business.

Similarly BEL, they have a huge order book and the execution has started happening and the margin improvement is going up because of expansion. The earnings will catch up over the next two-three quarter and you will see good improvement quarter on quarter on earnings also based on margin improvement.