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Aug’23 was an eventful month for the defence sector. Key points: 1) An order worth INR 190bn for 5 fleet support ships was awarded to Hindustan Shipyard; 2) Acceptance of Necessity (AoN) worth INR 78bn was accorded for various platforms; 3) progress is being made on development and acquisition of fighter aircraft along with a visit by Air Chief Marshal to HAL; 4) successful firing of Astra BVR missile from Tejas; and 5) progress on P75I and P76 submarine programmes; and 6) guided Pinaka Rocket System is likely to enter final user trials in next 1-2 months. We believe the progress on fighter aircraft and integration of indigenous missiles on them is likely to be positive for HAL, BDL, BEL and Astra. In particular, we see benefits for BEL (TP: INR 150; BUY) and Astra (TP: INR 425; BUY) in the near term.

Key developments in Aug’23

* Tejas fighter aircraft successfully test-fired an Indian-made Astra Mk1 airto-air missile.

* As per media reports (Link), Indian Air Force (IAF) is likely to order additional 100 Tejas Mk1A fighter jets. This is over and above the 83 Mk1A jets that have already been ordered.

* IAF has likely placed orders for long range glide bombs.

* Indian Army inducts lighter and compact version of Weapon Locating Radar (SWATHI Mountains) developed by BEL.

* The Naval Science & Technological Laboratory (NSTL) envisages the development of nex-gen submarine launched torpedo for the Indian Navy.

* Indian Navy has issued RFI for 12nos. Mine Counter Measure Vessels (MCVL) for delivery from 2030-37.

* Guided Pinaka Rocket System is expected to enter final user trials in 1-2 months.

* HAL has completed the production of LCH Prachand ‘Tank Buster’ helicopters ahead of its contracted schedule.

* Hindustan Shipyard has received an order worth INR 190bn for 5 fleet support ships.

* BEL has received orders worth INR 32.9bn, taking the order inflow to INR 113.8bn thus far in FY24.

* Adani Defence has secured the order from the Indian Army for UAVlaunched Precision Guided Munition (ULPGM).

* Astra Microwave has received orders worth INR 1.58bn, for supplies of radars, satellite subsystems and EW suite over 12-18 months.

* MDSL is planning to acquire a new floating dry dock (valued at over USD 10bn), which may play a pivotal role in constructing eight Next Generation destroyers for the Indian Navy

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