🛳️🪖2 Micro-Cap gems poised to dominate the Shipbuilding & Defence sectors!

While everyone is busy chasing multi-baggers in renewables, manufacturing, and electric vehicles, 2 underrated sunrise sectors—Shipbuilding and Defence—have been quietly brewing massive opportunities. 

Today, we will explore 2 micro-cap companies, Krishna Defence and NIBE Ltd, positioned to be major players in this exciting space.

Here's how (India's Rise in Shipbuilding & Defence)

Prime Minister Modi's "Make in India" initiative has set a clear vision for self-reliance in critical sectors.

This includes ambitious goals for both shipbuilding and defence. 

The government targets:

• 🎯 Defence exports of ₹50,000 crore by FY 2028-29 (already achieving a record ₹21,000 crore in FY 2024)

• 🎯 Additionally, India is ambitiously aiming to be among the top 5 shipbuilding nations within the next decade.

These ambitious plans create a fertile ground for domestic companies like Krishna Defence and NIBE Ltd.

In this article, we deep dive into both companies 

• - Business Overview 
• - Business Model and Growth
• - Financial Performance 
• - Summary (Here's what makes these companies stand out)

Let's discuss each one 👇🏻

Business Overview

1— Krishna Defence

With a market cap of ₹1,051 crore and a P/E ratio of 107, Krishna Defence has delivered a whopping 303% return over the past year.

The company operates primarily in 2 segments: Defence Application Products and Kitchen & Dairy Equipment.

However, their focus is shifting towards defence, where they manufacture critical products, aligning with India's ambitious goals.

Key Products and Innovations:

• • Bulb Bars: Previously imported, now made in India. These steel components are essential for naval warship hulls.

• • Ballast Bricks: Low magnetic signature bricks used in critical naval applications.

• • Specialized Weld Products: High-impact toughness products essential for underwater welding and Navy platforms.

• • Heavy Vehicle Factory Steel Profiles: Used in T90 Tanks of the Indian Army.

• • Bukhari Space Heating Devices: Designed for extreme cold, used by the Army.

Krishna Defence is also exploring cutting-edge technology with new products such as radio frequency solutions, remotely operated vehicles (ROVs), and fire-resistant composite doors.

With a current order book of ₹230 crore and ambitious growth plans, they are set to benefit from India's increasing defence needs.

2— NIBE Ltd

NIBE Ltd, with a market cap of ₹2,537 crore and a P/E ratio of 115, has seen an impressive 470% return in the past year. 

This company excels in 3 segments: Defence components, Electric Vehicle (EV) solutions, and R&D for lithium battery packs.

Key Products and Innovations:

• • Defence Components: Structures and sub-assemblies for missile launchers, assemblies for BrahMos Missile, and Pinaka rocket launcher.

• • Defence Electronics: Sensors, wiring, control systems, and military software.

• • EV Solutions: E-bicycles, e-rickshaws, batteries, motors, and solar induction cookers.

• • Naval Engineering Systems: Structures and sub-assemblies for naval applications.

NIBE's R&D wing is dedicated to advancing technologies in hybrid power control units, rugged mobile handsets, and various types of lithium batteries.

Their order book stands strong at ₹300+ crore, with a recent substantial order from Munitions India Ltd. for ₹682 crore, emphasizing their critical role in India's defence manufacturing.

Business Model and Growth

1— Krishna Defence

Krishna Defence is expanding its production capacity with three manufacturing plants and is phasing out its dairy segment to focus entirely on defence products. The company has also bagged significant orders, including a ₹65 Cr contract for space heating devices used by the army in high altitudes.

2— NIBE Ltd

NIBE Ltd's extensive order book stands at over ₹300 Cr, with recent significant orders from Munitions India Ltd. and agreements with HAL for manufacturing components. Their precision fabrication for defence and EVs gives them a strong competitive edge.

Financial Performance

1— Krishna Defence

• • Revenue Growth (YoY): From ₹63 Cr to ₹106 Cr (Up 68%)

• • Profit Growth (YoY): From ₹5 Cr to ₹10 Cr (Up 100%)

2— NIBE Ltd

• • Revenue Growth (YoY): From ₹105 Cr to ₹279 Cr (Up 165%)

• • Profit Growth (YoY): From ₹5 Cr to ₹22 Cr (Up 340%)

Both companies have shown remarkable financial performance, with strong revenue and profit growth, indicating robust future prospects.

Summary (Here's what makes these companies stand out):

1. Strong Order Books— Both Krishna Defence and NIBE Ltd have healthy order books, indicating strong future revenue streams.
2. Impressive Growth— Both companies have witnessed phenomenal revenue and profit growth in recent quarters.
3. "Make in India" Alignment— Their focus on indigenous defence production aligns perfectly with the government's vision of self-reliance.

Conclusion

As the global focus shifts towards strengthening defence capabilities and advancing shipbuilding technologies, Krishna Defence and NIBE Ltd are poised to emerge as leaders in their respective sectors. 

Their innovative products and robust financial performance highlight their potential to not just participate but dominate in these critical industries.

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The final decision rests with You. 

Both Krishna Defence and NIBE Ltd are well-positioned to ride the waves of India's shipbuilding and defence boom. 

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Could these micro-cap gems be the next multi-baggers waiting to be discovered?

Which of these companies do you believe has the edge? Share your thoughts below!

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