Defence shares in focus; HAL hits new high, BDL, Mazagon Dock gain up to 4%

According to reports India is set to give preliminary approval to three mega indigenous projects worth Rs 1.4 trillion.

Shares of defence companies were in focus, gaining up to 4 per cent on the BSE in Friday's intra-day trade in an otherwise subdued market amid reports that India is set to give preliminary approval to three mega indigenous projects which together would be around Rs 1.4 trillion.

According to a Times of India report, the three projects include manufacturing of another aircraft carrier, 97 more Tejas MK1A fighters and 156 Prachand light combat helicopters. As per the report, defence acquisitions council is likely to take up the AoN (acceptance of necessity) for the three projects at a meeting slated on November 30.

Though these projects have been under discussions from armed forces with the government, ICICI Securities believe that the process of awarding contracts will start after the AoN.

Hindustan Aeronautics (HAL) will be receiving the contracts for 97 Tejas MK1A and 156 LCH (totaling around Rs 1 trillion) and Cochin Shipyard is likely to receive the contract for the next aircraft carrier also. Bharat Electronics (BEL) along with Data Patterns and Astra Microwave would also be the beneficiaries in supplying electronic systems, sub-systems, the brokerage firm said in a note.

Following the news report, shares of HAL hit a new high of Rs 2,240, rallied 4.5 per cent on the BSE in intra-day trade. HAL is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.

The state-owned defence company recently incorporated a joint venture company with Safran Helicopter Engines SAS by name "Safal Helicopter Engines Private Limited", to carry out business of design, development, certification, production, sale & support of helicopter engines with one of the first opportunities identified as engine for Indian Multi Role Helicopter (IMRH) & Deck Based Multi Role Helicopter (DBMRH) projects.

Shares of Bharat Earth Electronics (BEEL) hit a 52-week high of Rs 155.30, surged 9 per cent, while, Datta Patterns (India) rallied 7 per cent to Rs 1,974.45, followed by Bharat Dynamics (4 per cent at Rs 1,153.35), Mazagon Dock Shipbuilders (4 per cent at Rs 2,060.80), Cochin Shipyard (3 per cent at Rs 1,138) and Bharat Electronics (2 per cent at Rs 142.15). In comparison, the S&P BSE Sensex was down 0.01 per cent at 66,012 at 12:53 PM.