Defence, power, renewable stocks to do well in 2025, says Antique; here's why

Antique Stock Broking in its India Equity Strategy 2025 note said it remains meaningfully 'overweight' on capex theme and likes stocks from industrials, defence, power, renewables, real estate and cement. It stayed 'underweight' on financials but preferred PSU banks, and FMCG sectors. The brokerage stayed 'neutral' on sectors such as technology, automobile and pharmaceuticals.

While the government capex has been profound over the past three years, there has been some slackness in H1FY25. Antique Stock Broking said the government capex has started picking up again and it will gather more steam in next one year, with a lot of political hurdles behind.

"Private and household capex is also picking up, which augurs well for growth. All parameters in our capex macro barometer remains accommodative leading us to be meaningfully overweight on Industrials, defence, power utilities and its chain, real estate and cement," it said.

For its defence universe, Antique expects 22 per cent earnings CAGR over FY24-27 on back of execution of strong order backlog that the companies have developed over the last few years.

"Our earnings estimates are 6 per cent below of the Street estimates primarily on account of below estimated execution in few companies where supply chain issues currently prevail. We remain constructive on the sector and believe that recent correction provides good entry point for the investors," it said while suggesting Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and PTC Industries Ltd as its top defence picks.

In the industrial pack, Antique expects 30 per cent earnings CAGR over FY24-27 on back of execution of strong order backlog that the companies have developed over the last few years, operating leverage and better demand scenario, leading to improved pricing scenario.

"Our earnings estimates are ahead of the street estimates by 8 per cent primarily on account of a) Ahead of consensus estimates sales and b) expectation of higher than consensus estimate margins. We remain constructive on the sector and believe that strong earnings growth to provide upside to the sector," it said.

Siemens, ABB India Ltd, Hitachi Energy India Ltd, BHEL, L&T and Kirloskar Oil Engines Ltd are Antique's top bets in the industrial segment.

In the case of utilities, Antique said total power demand for the first eight months of FY25 was up 5 per cent YoY while the peak demand was higher at 250 GW against 243 GW YoY.

With higher generation in the hydro segment and overall higher sell side liquidity, the prices on IEX have declined and thus boosting electricity volumes at IEX.

"Overall, the capacity addition is strong with installed capacity at the end of November 24 at 457 GW against 442 GW at the end of FY24. The offtake volumes for Coal India remain flat for 8MFY25. After the recent muted power demand growth, we expect power demand to improve in the 2nd half, this along with improved inventory will provide boost to coal India off-take volumes," Antique said while picking NTPC and COal India among its top picks.

In the real estate sector, Antique likes Aditya Birla Real Estate and Oberoi Realty.

"We expect all four top markets-MMR, NCR, Pune, and Bengaluru to witness strong absorption. The right product at the right price will sell; developers need to allow time for their products to succeed. A decrease in interest rates would further amplify this momentum," it said.

Antique has a March 2026 Nifty 50 target of 26,500.