Thread by @investage_

One sector that you could bet on for the future?

DEFENSE SECTOR 🛩📈

WHY?
[A brief thread for readers] 🧵

#sharemarketindia #finance #investing #sector #fundamentalanalysis #indiandefence

WHY TO CHOOSE THE DEFENCE SECTOR?

India has been constantly ⬆⬆ it's defence expenditure over the years. Budget for 2022, valued at USD 70.6 billion, represented an increase of 10% compared to the previous year’s allocation. This is expected to drive growth of this sector.

In recent years, the 🌎 has faced two severe events: COVID 19 and THE RUSSIA-UKRAINE WAR.

COVID-19 affected the Indian economy, its impact was not felt much on the country's defence sector. But, the Russia-Ukraine war has accelerated the prospects of Indian Defence Sector. ⬆

In the Budget 2022, India announced that 68% of defence-related goods will be allocated to Indian companies.

So, only 32% of projects will be outsourced. This will help Indian defence companies get more projects and generate higher revenues. ✅

GOVERNMENT INITIATIVES FOR DEFENCE SECTOR:

GOI has established two Defence Industrial Corridors (DICs) in the country, one in U.P called Uttar Pradesh Defence Industrial Corridor (UPDIC) and the other in Tamil Nadu called the Tamil Nadu Defence Industrial Corridor (TNDIC). 👇🏻

The goal is of attracting Rs 10,000 crore (US$ 1.31 billion) in investment in each.

The ministry aims to achieve a turnover of Rs. 1 lakh 75 thousand crore (US$ 25 billion), including an export of Rs. 35 thousand crore (US$ 5 billion) in the aerospace and defence goods and services by 2025. 💵

The private sector companies will also be allowed to export 25 per cent of their production to third countries and generate foreign exchange for the country. 💲

The Defence Ministry has decided to amend the DAP rules to allow private defence companies to collaborate with Indian Defence PSUs with a majority stake and produce required weapon systems. 📈⬆

HOW TO EARN MONEY FROM THIS SECTOR?

The defence business is lumpy, as the government being the client most of the time. The orders depend on the budgetary allocations towards defence.

There could be heavy debt on the balance sheet if the business is capital intensive. 🚩

The right way to invest in this sector is to look for the companies working on defence technologies that would find applications not just in defence industry, but outside as well. ✅

This will include the likes of communications, sensors, radars, imaging systems, and so on. 👩🏻‍💻

One should look for COs where market is not limited to India but are global with scalability in the business. 📏

We can conclude that the Defence sector not only provides defence to the nation but it also defences the money of long term investors during difficult times. ➕

Do comment the DEFENCE COMPANIES which you are tracking.

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Disclaimer: This tweet is for educational and knowledge sharing purposes only.