5 Indian Aerospace Stocks to Add to Your Watchlist

The aerospace industry is on the cusp of a revolution, propelled by technology advancements and a growing focus on sustainability.

From innovative startups to established players, companies are developing solutions to reduce environmental impact, enhanced efficiency, and space travel.

India, with its booming aviation sector and globally recognised space program, is a key player in this exciting landscape.

With its growing aviation sector and the increasing number of passengers flying every year, India has become one of the biggest aviation centres in Asia.

However, India's real strength lies in its space sector. Its numerous accolades in the space sector have allowed it to become a role model for the global space community with its low-cost but highly effective space missions.

The detection of water on the moon in the Chandrayaan-1 mission in 2009 was a game changer for the global space community, as the presence of water indicates the availability of fuel and oxygen for future space habitats on the moon.

Its latest follow-up mission of Chandrayaan-3 was a resounding success, as it made India the only nation to ever land on the moon's southern pole, making it one of the four countries that have ever been able to land on the moon.

With significant growth potential in the aerospace sector in India, here are 5 stocks to understand from the sector.

#1 Taneja Aerospace and Aviation

First on the list is Taneja Aerospace and Aviation.

The company is a prominent player in the Indian aerospace sector. Founded in 1994, it was the first private sector company in India to manufacture general aviation aircraft.

Its product portfolio includes P68C and Hansa, among others.

It manufactures complex parts and assemblies for various customers in the aerospace sector, both domestically and internationally.

The company provides aircraft design and modification services to the Indian Navy, Air Force, and other defence organizations.

Taneja Aerospace operates a well-equipped MRO facility for Airbus A320 and Boeing 737 series aircraft.

The company has experience in developing airfields, including runways, hangars, and air traffic control facilities.

In December 2023, the company signed a Memorandum of Understanding with Altair Infrasec to support the development of the prototype of a strategic product worth Rs 35 million (m).

Last week, the company raised Rs 199.9 m via the preferential issue of shares.

Going forward, the company plans to broaden its MRO capabilities to service a wider range of aircraft types beyond the current Airbus A320 and Boeing 737 series.

For more details, see the Taneja Aero company fact sheet and quarterly results.

#2 SpiceJet

Second on the list is SpiceJet.

SpiceJet is an Indian budget airline headquartered in Gurgaon, Haryana.

The airline operates 630 daily flights to 64 destinations, including 54 Indian and 15 international destinations from its bases in Delhi and Hyderabad.

While SpiceJet is primarily known as a low-cost airline, it has a subsidiary called SpiceJet Technic that operates in the aerospace sector.

Specialising in Maintenance, Repair, and Overhaul (MRO) services, SpiceJet Technic focuses on servicing various aircraft types, including models from Boeing and Bombardier.

With expertise in component repair and overhaul for over 50 different types of aircraft components, SpiceJet Technic actively contributes to the aerospace sector.

However, it's important to note that SpiceJet's primary business remains in the airline industry.

SpiceJet is actively exploring adding new domestic and international routes to its network. They recently launched flights to Dubai and Male and are considering expanding their presence in Southeast Asia and West Asia.

The airline aims to strengthen its presence in regional markets within India, connecting smaller cities and towns to major hubs.

Going forward, SpiceJet aims to undertake various cost-saving measures, including optimizing fuel consumption, negotiating better lease deals for aircraft, and streamlining operations.

The airline is working to reduce its debt burden, which has been a major challenge in recent years.

For more details, see the SpiceJet company fact sheet and quarterly results.

#3 InterGlobe Aviation (Indigo)

Third on the list is InterGlobe Aviation (Indigo).

InterGlobe Aviation is the operating company for IndiGo, India's largest passenger airline in terms of domestic market share.

The airline operates on an LCC business model, offering no-frills air to passengers in the domestic and international sectors.

Unlike SpiceJet, IndiGo, primarily known as a major passenger airline, does not directly participate in the aerospace sector. They focus solely on airline operations, providing passenger air travel services within India and internationally.

However, IndiGo's activities indirectly impact the aerospace sector in several ways.

IndiGo's exponential growth and substantial fleet size contribute significantly to the demand for new aircraft, thereby, benefiting aerospace manufacturers like Airbus and Boeing. Additionally, as a large-scale operator, IndiGo relies on MRO services offered by aerospace companies to ensure the operational efficiency of its fleet.

Furthermore, while IndiGo concentrates on its airline operations, its pursuit of improved efficiency and cost reduction may lead to the adoption of technological advancements developed by aerospace companies.

This could encompass innovations such as fuel-efficient engines or advanced navigation systems, showcasing the interdependence between major airlines like IndiGo and the broader aerospace sector.

According to a media report on 26 February 2024, IndiGo Airlines is looking to dry-lease about 12 aircraft from the secondary market and wet-lease up to eight airframes to address the grounding of several A320-200N and A321-200NX due to the Pratt & Whitney engine issues.

The Indian LCC is in talks with multiple leasing companies and carriers to add to its fleet before the summer schedule and is in the final stage of negotiations with Qatar Airways (QR, Doha Hamad International) for five aircraft and Ryanair (FR, Dublin International) for three.

For more details, see the Interglobe Aviation (Indigo) company fact sheet and quarterly results.

#4 Global Vectra Helicorp

Fourth on the list is Global Vectra Helicorp.

Global Vectra Helicorp Limited (GVHL) is India's largest private helicopter company. It has a fleet of 29 aircraft ranging from small light helicopters to medium-sized twin-engine helicopters, seating 4 to 15 passengers.

Its primary focus revolves around the operation of its diverse helicopter fleet, serving various purposes. A significant portion of their operations is dedicated to providing transportation and logistical support to offshore oil and Indian gas industry, showcasing their pivotal role in the country's energy sector.

In addition to offshore operations, GVHL extends its services to onshore activities, offering diverse services such as VIP transport, election flying, heli-pilgrimage, and aerial surveys for government and private clients across India.

Unlike certain aerospace entities involved in manufacturing or design, GVHL does not engage in aircraft manufacturing, design, or development activities.

Emphasizing its commitment to operational excellence, GVHL positions itself as an expert in the operation and maintenance of helicopters rather than actively contributing to the development of new technologies or advancements in the broader aerospace field.

This specialisation underscores their proficiency in meeting the specific needs of clients across various sectors through efficient and reliable helicopter services.

Going forward, the company plans to expand its fleet and service offerings. It further plans to focus on the growing offshore market.

For more details, see the Global Vectra company fact sheet and quarterly results.

#5 TAAL Enterprises

Last on the list is TAAL Enterprises.

TAAL Enterprises offers air charter solutions. It provides air-charter service for luxury private air charter to any destination, tailored service, and other related services.

Its segments include air charter and engineering design services.

In addition to its aviation services, TAAL engages in the trading of goods. This aspect of its business involves the exchange, buying, and selling of products. It adds a commercial dimension to TAAL's operations beyond aviation services.

TAAL is involved in providing engineering design services. This signifies that the company extends its expertise to design solutions, potentially encompassing aeronautical and aerospace engineering. These services contribute to innovation and efficiency within the aerospace and aviation sectors.

Going forward, the company aims to expand its presence to new geographical areas. Additionally, there are plans for forming partnerships and further expanding its operations.

For more details, see the TAAL Enterprises company fact sheet and quarterly results.

Conclusion

The Indian aerospace and defence (A&D) market is poised to reach approximately US$ 70 billion (bn) by 2030, marking a significant milestone in its growth trajectory.

This anticipated expansion is attributed to strategic technological collaborations, a focus on manufacturing, and the government's robust efforts to establish a thriving Aerospace and Defence ecosystem within the country.

India's significance in the global aerospace market is underscored by major players like Boeing, Airbus, and other top Original Equipment Manufacturers (OEMs).

These companies view India as a strategically important foreign market, drawn by a substantial demand for aircraft, cost-effective labour, and technical expertise.

Collaborations between international manufacturers and Indian suppliers, along with small and medium enterprises, are actively contributing to the development of a robust aerospace ecosystem in the nation.

India's competitive advantage lies in the cost-effectiveness of component manufacturing, driven by low labour costs, abundant resources, and supportive governmental regulations.

The aerospace sector in India not only presents substantial growth potential but also invites international firms to invest and optimise manufacturing processes, bolstered by the government's Make in India policy.

These mentioned companies provide a glimpse into the sector, but there are additional players worth studying, including HAL, Bharat Electronics, Datta Patterns, MTAR Technologies, Apollo Micro Systems, and many others.

However, as with any investment, a careful examination of the fundamentals of companies is advisable before making investment decisions in this dynamic and evolving sector.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...