Indian Defense Sector

With my limited knowledge I can share few points here.

• Stocks are over valued. Few are in bubble state for sure, because there is no insights on their current happening (we only know last quarterly result and few news here and there) like BDL, krishna, bharat forge, etc.
• I find HAL, Mazdock still under valued. (not a buy recommendation)
• Defense cycles are quite long and it take lots of time for government to decide on something, frame a policy, allocate budget and start working. There are also lots of parameters from international arms companies, other countries, politics and so on.
• Right now it look like government is very much clear on their agenda, they want to establish India as a defense hub. Second, there is huge potential in terms of business, because of the India’s current foreign policy and strategic position we are in to. This business will definitely flourish.
• But current government has to continue for next few year, which may add risk to this scenario.
• We may see news related to this in the upcoming budget in this month. So this may further push this sector.

Let’s see how this goes. Depending on the risk appetite of the investor, one can take the decision. Also I would advise everyone to do their due deligence on each company before investing, at least to basic calculations of valuation, PE, current orders, management, policy, etc.