- 24 Jul 2024
- ICICI Securities
DEFENCE CAPITAL OUTLAY REMAINS UNCHANGED AT RS 1.72 LAKH CRORE FOR FY25
News: Defence capital outlay stands at Rs 172000 crore for FY25E (9.4% higher as compared to FY24BE). For FY25E, capital outlay for aircrafts & aero-engines is allocated at Rs 40,278 crore (+67% YoY) while allocation for naval fleets is at Rs 23,800 crore (-2.6% YoY). For Naval dockyards and HMVs (Heavy & Medium Vehicles), capital outlay stands at Rs 6830 crore (+27.9% YoY) and Rs 4637 crore (+70.8% YoY). Defence R&D (research & development) outlay is at Rs 13208 crore (vs 12943 crore in FY24RE). For space sector, budgeted capex stands at Rs 5567 crore (+25% YoY).
Views: Capital outlay remains unchanged from interim budget (announced in Feb 2024). We believe that, order inflows for defence companies will remain healthy considering the rise in budget and strong pipeline of projects & platforms (approved by the government in the last 2-3 years) including aircrafts, naval warships, submarines, missiles, combat vehicles, artilleries etc. For space sector, govt is focused on involving private players for faster development of new launch vehicles, satellites etc. With continued emphasis on expanding the space economy by 5x in the next 10 years, a venture capital fund of Rs 1000 crore will be set up by the govt.
Impact: Neutral