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Informist, Friday, May 9, 2025

MUMBAI – Gains in defence-related stocks are likely to be limited next week as these stocks have already run up in anticipation of escalation in tensions between India and Pakistan. The Nifty India Defence index has risen over 4% since the attack on Indian tourists in Pahalgham, which left 26 civilians dead. This escalated into Operation Sindoor, with Indian armed forces attacking terrorist sites in Pakistan, and Pakistan retailiating by attacking Indian military sites on the intervening night of Thursday and Friday.   

"Shares of defence-related companies have been in the limelight of late because of their healthy order books, and also since the terror attack in Pahalgam on Apr. 22," said Avinash Kumar Pathak, a lead senior equity research analyst at LKP Securities. He, however, ruled out a strong rise in these stocks as defence contracts take time for execution and valuations of several defence stocks are stretched, Pathak said.

Overall, capital goods companies are expected to see stock-specific reaction next week as several companies in the sector are yet to report their March quarter earnings. Aviation and avionics major Hindustan Aeronautics is scheduled to announce its quarterly results Wednesday. The day will, in fact, be a busy one with several other companies in the sector such as Apar Industries, Kirloskar Oil Engines, V-Guard, Tata Power, and Hitchi Energy also set to report their results. Among other major companies, Honeywell Automation will report its earnings on Tuesday, and Ratnamani Metals will detail its results Friday.

Hindustan Aeronautics is expected to report a 30% on-year decline in its net profit at INR 30.10 billion for the March quarter and the company's revenue is seen falling more than 11% to INR 130.90 billion, according to the average of estimates from five brokerages. This is primarily because of delays in execution of its manufacturing order book, analysts said. Investors will keenly watch management commentary on provision for expenses, revised delivery schedule for light combat aircraft, and updates on execution and delivery of the Tejas Mark-1A fighter aircraft to the Indian Air Force.

Earlier this week, construction and engineering behemoth Larsen & Toubro beat the Street's expectation to report a 25% on-year jump in its consolidated net profit at INR 54.97 billion for the March quarter. It was aided by a significant one-time gain of INR 4.75 billion, net of taxes. The company, however, missed the street's revenue estimate. L&T said it remains cautiously optimistic in the backdrop of turbulent global geopolitical dynamics. 

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* IRCON Intl gets INR-4.58-bln order from North Eastern Electric Power Corp
 

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Shakshi Jain

Edited by Avishek Dutta

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