DEFENCE RELATED STOCKS GOOD BET FOR LONG TERM; TOP PICKS FOR 2015
Most of the defence related stocks have more than doubled in the past one year on hopes that the Cabinet’s nod to open up defence sector will provide much needed liquidity and opportunities for the companies operating in the sector.
The defence sector is probably the only sector that has undergone the most under the FII radar. Increased FDI limit might just provide tremendous boost to the sector as it will allows the much needed surge in liquidity which is badly needed due to the high capitalization requirements for projects undertaken by the companies.
In August, FDI ceiling in the sensitive defence sector has been hiked from current 26 per cent, with the condition that the company seeking permission of the government for FDI up to 49 per cent should be an Indian company owned and controlled by Indians.
Foreign Direct Investment (FDI) worth Rs 24.36 crore has been received in the defence sector till September this year. The Prime Minister’s call to “Make in India” may well be targeted at defence sector among others, where the country spends a big chunk of its fund on imports.
And if indications are anything to go by, the Vibrant Gujarat 2015 summit may well open the gate for defence equipment manufacturers to set shops in India, particularly in Gujarat.
Recently defence projects worth Rs1.5tn (pending for last 5-6 years) have been cleared for ordering.