国防公司推动利润率扩张

India | Engineering & Construction Defence cos. drive margin expansion FY25 order flow rose 28% YoY for the coverage universe, led by HAL andSiemens, which saw 214% and 28% YoY growth. Defence order flows rose89% YoY. Operating leverage was seen for most companies led by defencestocks, which should continue to play out in FY26E. Power and defencecontinue to have high visibility ahead and railways outlook has improved.Top picks: HAL, Siemens, L&T, and KEI. ABB, Siemens and Thermax combined saw 21% YoY order flow growth in 4QFY25:Siemenssaw 43% YoY order flow growth with a large export order in rail segment. Mgmt. highlighted onthe call that domestic rail pipeline is healthy. ABB’s mgmt. highlighted data centres, electronics,and renewables remain high-growth areas, though there is some deferment in decision makingon large orders. Thermax’s order flow declined 8% YoY, but mgmt. indicated that the enquirypipeline is showing positive signs with some larger projects expected to materialise in 1HFY26.L&T’s 4Q order flow rose 24% YoY, led by its largest ever order from QatarLNG. 57% YoY risein L&T’s prospect pipeline to Rs19 trn gives complete comfort on mgmt.’s 10% YoY order flowgrowth guidance in FY26E. Bharat Electronics (BEL) saw 47% YoY decline in order flow in FY25on a high base and missed guidance of Rs250 bn. FY26E order flow guidance of Rs270 bnlikely includes spillover from FY25 but excludes the Rs300 bn QRSAM order which is likely tobe awarded in 1HCY26. HAL's 214% order flow growth in FY25 was driven by the Rs628 bncontract for 156 advanced light helicopters booked in 4Q. BHEL reported robust order flowwith 7% YoY growth in 4Q despite a high base led by Rs419 bn of power equipment orders. Road,rail,defence tracking ahead ofbudgeted growth Defence:Ready and tested;changesperception India Defence Monthly – Make in India thefocus Key Takeaways From Industrial Meetings Industrials: Valuations vs previous cycles:Quick glance Good operating leverage performance with 151 bps YoY margin expansion to 16%:Defencestocks Hindustan Aeronautics (HAL) and BEL beat our margin estimates with strong marginexpansion of 831 bps and 385 bps YoY respectively, driving the overall margin improvement.Both mgmt. teams guided for margins sustaining or improving from FY25 levels on accountof operating leverage. ABB, Siemens, and Thermax saw 9% YoY EBITDA growth on just 5%revenue growth, led by Siemens’ energy business. L&T’s core margins – up 55 bps YoY – beatestimates in 4Q and mgmt.’s FY26E guidance at 8.5% vs 8.3% YoY is a positive. Industrials:L&T,BHEL drive order flowgrowth BudgetFY26–Capex Lower Priority,Though Decent Growth 2025Outlook:Budget to be CloselyWatched Defence and power standout on capex visibility:We believe the recent Indo-Pak conflict willenhance the domestic defence manufacturing focus, and estimate 14% CAGR in domesticdefence capital spends over FY25E-30E. Meanwhile, Power Grid (PWGR IN, Rs289, Buy) in its4Q call highlighted the Rs9.2 trn power transmission capex opportunity and pegged the near-term bid pipeline at Rs450 bn with more projects to be added. Our estimates factor powercapex to rise 2.5x to Rs25 trn+ in FY24-30E vs FY17-23. Company specific triggers also exist:1)Siemensshould benefit from revenue and marginupside on execution of its railway orders 2)HALhas 5-year growth visibility of 19% EPS CAGR,driven by indigenisation, which should keep multiples elevated 3)L&T– strong visibility withconservative guidance should drive upside 4)KEIremains a holistic play on power, capex,housing and exports. Lavina Quadros * | Equity Analyst91 22 4224 6116 | lquadros@jefferies.com Shirom Kapur * | Equity Associate+91 22 4224 6141 | skapur1@jefferies.com The Long View: Hindustan Aeronautics Investment Thesis / Where We Differ •Market leader in India defence aircraft manufacturing.•FY25 order book 6.1x revenue.•Earnings delivery on existing order book with clarity on margin trajectory,with each passing result helping the stock move higher from currentlevels. Downside Scenario,INR3750, -25% Upside Scenario,INR7500, +50% Base Case,INR6475, +30% •Defence orders move at a faster pace withmore proposals being cleared and tendersbeing floated in the near future.•Make in India program gains pace with thruston a higher proportion of domestic ordersbeing placed.•FY27E EPS: Rs165, Target PE multiple: 45xFY27E, PT Rs7,500. •Visible pipeline of Rs1.5-1.7trn+ giving enoughvisibility for medium-term revenues.•Rising indigenization helps HAL on order flowgrowth.•FY27E EPS: Rs161.9, Target PE multiple: 40xFY27E, PT Rs6,475. •Defencespendingfacesregulatoryroadblocks and ordering process slows down.•Margin pressure on execution due toindigenous manufacturing proportion movinghigher than expected.•FY27E EPS: Rs150, Target PE multiple: 25xFY27E, PT Rs3,750. Sustainability Matters Catalysts Top Material Issues:1) Materials Sourcing -HAL has established a rigorous mechanism for supplierselection and inclusio