Chandrayaan-3: Space Sector Stocks Rally After Successful Landing, Gain Up To 10%

Shares of companies with businesses in the aerospace industry rallied up to 10% on Thursday after India became the first country to reach the moon’s unexplored south pole following Chandrayaan-3’s successful landing. India is the fourth country, after the former USSR, the US, and China, to soft land on the moon through completion of its Chandrayaan-3 mission.

Centum Technologies, which supplies systems to the Indian Space Research Organisation (ISRO), jumped 10 per cent on Thursday after closing 14 per cent higher on Wednesday.

Shares of Godrej Industries jumped over 3% today as its subsidiary, Godrej Aerospace, supplies components to ISRO. The stock settled 7% higher at Rs 531 on Wednesday. The company has supplied more than 175 engines for the Polar Satellite Launch Vehicle (PSLV) and Geosynchronous Satellite Launch Vehicle (GSLV) launches in the last three decades.

Hindustan Aeronautics Limited (HAL), which manufactured the Lander Module ‘Vikram’ of Chandrayaan-3, jumped 3.5 per cent to touch a fresh 52-week high on Wednesday’s session. On Thursday, the PSU stock added another 1 per cent to hit a 52-week high of Rs 4,135. HAL has gained over 81 per cent in the last year.

Paras Defence and Space Technologies, which supplied the navigation system for Chandrayaan-3, jumped over 12 per cent to touch a 52-week high of Rs 842 on Thursday. The company specialises in defence and space optics, defence electronics, and heavy engineering. The stock has surged over 24 per cent in the past year.

Larsen & Toubro gained over a per cent to hit a new 52-week high of Rs 2,766 on Thursday. The aerospace unit of L&T supplied equipment to India’s moon mission, including tracking radar used to monitor launch vehicles.

MTAR Technologies gained over 10 per cent to hit Rs 2,450. The Hyderabad-based company manufactures rocket engines and core pumps for ISRO.

Bharat Electronics, the company that assembled payloads for Chandrayaan-3, was trading around 2 per cent higher at Rs 135.50.

Hyderabad-based alloy maker Mishra Dhatu Nigam (Midhani) jumped 4.5 per cent to hit Rs 426.30. The company supplied nickel- and cobalt-based alloys for the launch vehicle.

Among others, Indo National, which provided four electronics components for the launch vehicle, jumped 5 per cent to touch Rs 458.65.

On Wednesday, ahead of the Chandrayaan-3 landing, the stocks of 13 space sector companies skyrocketed, displaying the optimism around India’s space program. These companies added nearly Rs 13,000 crore to their market value.

Santosh Meena, Head of Research at Swastika Investmart Ltd said a successful landing of Chandrayaan-3 is likely to generate positive sentiment for these companies, potentially boosting their stock prices. Despite the short-term gains, the overall long-term outlook for these stocks remains bullish.

"Investors would be wise to maintain their positions, viewing any profit booking as a chance for long-term entry. However, for traders, chasing these stocks immediately after the event might not be advisable. Waiting for potential profit booking could offer more favourable entry points, aligning with a strategic long-term investment approach. HAL, L&T, and MTAR technologies are our preferred bets," he added.

"Considering the Chandrayan project's cost of Rs 600 Crore, it appears challenging for any company to generate over 2 per cent product yield with 10-20 per cent margins, potentially leading to an EBITDA of Rs 60 lakhs to Rs 1.2 crores," said Arpit Jain, Joint MD at Arihant Capital⁩ .

"Even with 15 per cent of products sourced from listed firms, it's hard to foresee an EBITDA beyond Rs 20 crore. Thus, a Rs 50,000 crore market cap surge seems unreasonable, especially with Chandrayan 4 not coming soon. Prudent evaluation applies to MTAR, Paras, HAL, BHEL, and L&T," he added.

Outlook For Indian Space Industry

According to Mukesh Kochar, National Head of Wealth Management at AUM Capital, India currently contributes around 2–3 per cent to the global space economy, and it is expected to reach around 8–10 per cent in the coming 8–10 years. The latest milestone will establish India as a cost-effective satellite launcher and create global opportunities.

"Sectors like aerospace and defence will get a boost. There are around 140 registered space startups in India. These startups should attract a lot of investments after the success of this remarkable journey. The budgetary allocation is also expected to increase going forward. So overall, this will give a boost to the Indian economy," he said.