Dipan Mehta sees defence as a long-term story despite near-term volatility

Synopsis

Market expert Dipan Mehta stated that the defense sector is mature, with stock prices reflecting order book strength. He advised underweight investors to seek entry points during quarterly disappointments, emphasizing a buy-and-hold strategy. Regarding gold financing, Mehta praised Muthoot Finance's focus and risk management, suggesting temporary uncertainty could offer attractive entry points for long-term investors.

Dipan Mehta,

Director, Elixir Equities

believes the defence sector has moved into a more mature phase, with most companies already well understood by investors. Speaking to ET Now, he said the market has largely priced in the existing order book strength of defence players.

“All defence stocks are pretty much well discovered and their order book positions… have been captured in the stock price,” Mehta noted. He added that investors who are underweight should look for opportunities when quarterly numbers disappoint, calling it a sector where one must stay invested once positioned.

On the gold financing theme, ET Now pointed out how gold financiers have benefited from the sharp rise in prices. Mehta credited Muthoot Finance’s success to its focus and discipline.

“Muthoot Finance… has stuck to its knitting and been focused only on gold loans… and that has been the key winning point,” he said, highlighting its strong brand, revived industry conditions, and robust risk management.

The channel raised concerns about whether a cooling in gold prices might trigger defaults or stress valuations. Mehta acknowledged the cyclical nature of the business but expressed confidence in Muthoot’s ability to handle downturns.

“Muthoot has seen many periods of volatility in gold prices… and they have a good system in place to manage these kind of risks,” he said. He added that temporary phases of uncertainty could actually be attractive entry points for long-term investors.

According to Mehta, sentiment may fluctuate over one or two quarters, but the company’s long-term outlook remains solid.

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