Shares of an Indian aerospace and defence engineering company have delivered stellar returns to investors in the past. However, the stock appears to have hit a roadblock, with profit booking potentially weighing on sentiment as it has hit lower circuits for four consecutive sessions.
We are talking about , a company with an international presence that designs, develops and manufactures mission-critical systems across aerospace, avionics, naval systems, radars and communication systems.
On Tuesday, 13 October, the stock dropped 5% to hit the lower circuit of ₹914.85. Notably, it hit lower circuits last Thursday, Friday, and Monday as well. At the current juncture, the defence stock looks set to extend its losing streak for the sixth consecutive session.
At the current market price of ₹914.85, the stock has lost nearly 19% over the last six consecutive sessions. But despite this correction, the stock’s return this year is astonishing.
Sigma Advanced Systems share price returns
BSE data shows that the stock has soared 497% over the last one year, hitting a 52-week high of ₹1,165 on 6 October and a 52-week low of ₹139.30 on 16 March this year.
On a longer timeframes of two years (up 1,286%), five years (up 4,665%), and 10 years (up 4,315%), the returns are stellar.
Simple arithmetic calculations reveal that an investment of just ₹2.30 lakh in this stock a decade ago would be worth over ₹1 crore today.
What should investors do now?
Experts find the company’s growth potential attractive but appear wary of the stock’s stretched valuations.
Ravi Singh, Chief Research Officer at Master Capital Services, said that Sigma Advanced Systems’ ₹8,000 crore-plus order book and over 90% international orders highlight strong business opportunities.
However, Singh quickly added that despite falling nearly 20% from its all-time high, the stock trades at a P/E of around 105 times, making valuations appear expensive compared with its current revenue of ₹492 crore in FY26.
“Investors should avoid rushing into the stock and wait for a meaningful valuation correction. Around ₹800, it may be worth evaluating, subject to business performance and market conditions,” said Singh.
Vinit Bolinjkar, the head of research at Ventura, also underscored that the growth opportunity of Sigma Advanced Systems is meaningful as the company is building an integrated aerospace and defence platform, supported by a large order book, recent acquisitions and a growing manufacturing base in India.
However, the share price already reflects high expectations.
Bolinjkar recommends holding existing shares while tracking order execution, margin delivery and cash generation.
Bolinjkar pointed out that the acquisition of UK-based Nasmyth has expanded its manufacturing capabilities and international presence, while its established defense business gives it exposure to domestic programmes as well as export opportunities. This combination could broaden customer access and allow the company to participate in a larger part of the aerospace and defense supply chain.
The benefit, however, depends on integrating the acquired operations and steadily transferring more work to its Indian facilities.
Further, Bolinjkar added that the company reported an order book of over ₹8,000 crore, with more than 90% linked to international orders and contracts typically extending over several years. This provides revenue visibility, but the order book should not be treated as near-term revenue, as execution will be spread over time and will depend on customer schedules, production readiness and working-capital requirements.
“Sigma’s presentation indicates that aerospace accounts for the largest share of the order book and typically earns lower EBITDA margins than defense exports and domestic defense. The company therefore needs to grow volumes while improving its mix and operating efficiency,” Bolinjkar noted.
“For the investment case, revenue quality, operating EBITDA and cash conversion are more useful indicators than headline profit growth alone. Our model’s FY27E–FY29E scenario forecasts revenue rising from ₹1,374 crore to ₹1,896 crore, EBITDA from ₹254 crore to ₹364 crore, and EBITDA margin from 18.5% to 19.2%,” said Bolinjkar.
Technical experts highlight that the stock is consistently moving higher, forming a pattern of higher highs and higher lows while trading above both its long-term and short-term moving averages.
“Given its history of frequent price-filter hits, we advise traders to exercise extra caution when trading this stock. As far as key levels are concerned, support is placed in the ₹800– ₹725 spot zone, while resistance is seen in the ₹1,100– ₹1,150 range,” said Vipin Kumar, AVP-Research at Globe Capital Market.
According to Aditya Thukral, founder and analyst at AT Research and Risk Managers, the stock is in a short-term corrective phase within the uptrending channel and is in the probable formation of a higher low, and the support is held near ₹910.
“As long as it stays within this rising channel, there are chances of an uptrend continuation. However, a break below this channel support would change the trend for the stock to sideways or to a downtrend,” said Thukral.
“The stock is in an uptrend and is currently experiencing a correction, and the range of ₹900 to ₹910 should hold for the continuation of this uptrend. Longs are advised to maintain this range as the stop loss,” Thukral said.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.