Order books bloat for defence PSUs; Garden Reach Shipbuilders zoom on stock markets -

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By S Jha

New Delhi, October 10: Prime Minister Naredra Modi’s pitch for self-reliance in the defence sector (Atmanirbharta) appears to have given a new life to the public sector units in the manufacture of goods for the armed forces.

Order books with some of the defence PSUs are at multiples of their market valuations, which is making investors grabbing their shares on the stock market. On Monday, when the stock markets were under tremendous pressure on account of Russia raining missiles over Ukraine, Garden Reach Shipbuilders, a Kolkata-based PSU, was flying high on the bourses.

The scrip of Garden Reach Shipbuilders at one time looked as if it would lock into the 20 per cent upper circuit, while closing the trading day with a gain of 16.93 per cent to close at Rs 458.50 a share. In five days, this scrip has gained over 28 per cent. This defence PSU is stated to have an order book of Rs 23,583 crores. Ironically, the market valuation of this company is just about Rs 5,000 crores, suggesting that the order book is more than four times of the current worth of the company.

Another defence PSU is Hindustan Aeronautics Limited, which is flying high amid the self-reliance buzz in the defence sector. HAL is also partnering with ISRO for space related works, and the Bengaluru-based PSU is also bloating with an order book of Rs 84,800 crores. The market valuation of HAL is about Rs 80,000 crores. In one year, this scrip has gained 77 per cent on the bourses, which is significant for the size of the company.

Mazagon Dock Shipbuilders is another defence PSU, which is flying high on the bourses, having gained a cool 28 per cent in just five days. The market valuation of this PSU is Rs 12630 crores, and it has an order book of Rs 43,500 crores. This PSU in fact has recently listed on the stock markets, and has been a star performer.

Cochin Shipyard, which manufactured INS Vikrant, whose original avatar in the 1971 war was wrecker-in-chief of Pakistan, has gained 35 per cent on the stock markets in the past one month. It also has an order book of Rs 20,000 crores, while its market valuation currently is only Rs 6950 crores.

The story repeats for similar listed defence PSUs, bloating with the order books and their share prices flying in a market, which has been battered by the global run of inflation on account of the Russian war in Ukraine.