Defence stocks: The continued Acceptance of Necessity (AoNs), orders even in the pre-election year bode well for the defence sector. Analysts said it allayed apprehensions of investors pertaining to orderbook accretion. 
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Defence stocks: The continued Acceptance of Necessity (AoNs), orders even in the pre-election year bode well for the defence sector. Analysts said it allayed apprehensions of investors pertaining to orderbook accretion. Shares of railways, defence and power sector players led gainers at the PSU pack, adding over 6 lakh crore to the BSE PSU index market capitalisation (m-cap) in 2023 so far. A least eight stocks from the 55 BSE PSU index constituents delivered 100 per cent returns or more this year while 29 stocks in total delivered 20 per cent or higher returns.
In the case of railways, the entire infrastructure of Indian Railways is undergoing a major transformation, particularly due to the policies implemented by the Ministry of Railways and the Government of India. Dedicated freight corridors, the modernisation of railway stations, and the regular launch of new Vande Bharat trains are some of the notable initiatives, said Gaurang Shah, Senior Vice President at Geojit Financial Services.
Shares of Indian Railway Finance Corporation Ltd (IRFC) zoomed 154 per cent in 2023 so far, Ircon International Ltd soared 152 per cent while Rail Vikas Nigam Ltd surged 148.57 per cent during the same period.
"Work on high-speed train corridors, such as the Mumbai-Ahmedabad route, is gaining momentum. The replacement of old coaches with lightweight and more comfortable ones is already in progress, and the railway network is expanding. The government has laid out a comprehensive roadmap for the Indian Railways sector, and policies are well-defined. Additionally, large orders are coming through to respective companies which are associated with Indian Railways, be it public or be it government owned and we anticipate this trend to continue," Shah said.
"The only thing is that one needs to have a long-term time horizon. Order execution will take time to translate into top-line and bottom-line growth," he said.
Shares of Mazagon Dock Shipbuilders, which comes under the Ministry of Defence, jumped 161 per cent this year. Cochin Shipyard Ltd also climbed 100 per cent. In the case of defence, the continued Acceptance of Necessity (AoNs), orders and tests even in the pre-election year bode well for the defence sector. Analysts said it allays apprehensions of investors pertaining to orderbook accretion.
ICICI Securities noted that Bharat Electronics (BEL) is particularly in vantage position, having crossed 50 per cent of order flow guidance of Rs 20,000 crore for FY24. "In case of HAL, we are positive on the timely delivery of LCH Prachand; however, we will monitor the progress around the deliveries of Tejas and Tejas Mk1A. In the case of naval platforms, we find a lot of optimism being built in the stocks on the likely ordering; however, we prefer to wait for specific order inflow," the brokerage said in a note. Hindustan Aeronautics gained 55 per cent year-to-date while BEL is up 34 per cent during the same period.,
REC rallied 113 per cent, SJVN 105 per cent while Power Finance Corporation climbed 100 per cent. In the case of SJVN, the company is likely benefit from 10GW capacity addition over FY26. "Regulated equity is as on date on the commission project at Rs 6,200 crore; it is expected to reach Rs 14,000 crore post commissioning of its under construction projects," it said. The average price target for PFC, as per Trendlyne, suggests limited upside potential for the stock. For REC, the average target price suggests a modest single digit upside ahead.
Engineers India, Mishra Dhatu Nigam, MRPL, ITI, BHEL, MMTC and Rites are among PSU stocks rising 50-80 per cent this calendar. Overall, the combined m-cap of BSE PSU index constituents has breached 38.30 lakh crore from Rs 32.07 lakh crore at the end of 2022.
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