ASX industrials shares grew significantly in FY 25.
The S&P/ASX 200 Industrials Index (ASX: XNJ) is up almost 10% since January.
Broker Bell Potter has identified two ASX industrials shares that are currently undervalued, placing a buy recommendation on both.
These companies currently have market caps between $300 to $400 million.
It is essential to remember that with growth shares comes risk, so understanding the basics of growth stock investing is critical before starting a growth investing strategy.
Let's see what the broker had to say about these options.
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Alliance Aviation Services Ltd (ASX: AQZ)
This aviation services provider serves the mining, energy, tourism, and government sectors and is currently the leading provider of FIFO (fly in, fly out) air charters in Australia.
Its share price has fallen 14.24% over the last year.
However, broker Bell Potter has a buy recommendation and $3.80 price target.
This indicates a 43.4% upside from its current share price.
The broker was impressed by the record revenue of $339 million for the half year ending December 31, 2024.
The broker also noted that the company maintains a focus on expanding its fleet, which is expected to support revenue growth.
Alliance Aviation demonstrated solid financial performance with growth in revenue and operational efficiency. The focus remains on strategic growth despite external challenges in labor costs and operational efficiency. Management is optimistic about future growth opportunities, mainly through fleet expansion and optimisation of services.
Bell Potter isn't the only broker tipping upside; Morgans also has a $3.80 price target on the aviation company's shares.
An important date to watch will be August 20, when the company will release its full-year financial report for the year ended 30 June 2025.
Duratec Ltd (ASX: DUR)
Duratec Ltd is an investment holding company. The company's operating segment includes Defence; Mining and Industrial; Building and Facades, Energy, and Others. It generates maximum revenue from the Defence segment.
Its share price has risen 21.43% in the past year.
At the time of writing, shares in the investment holding company are trading at $1.53. Bell Potter has a price target of $1.80, indicating 17.65% upside.
The broker believes the company's exposure to defence has it well positioned to benefit from sector tailwinds.
Ongoing investments in infrastructure, particularly linked to defence and energy sectors, represent favourable market conditions for Duratec. The focus on sustainable and efficient project solutions aligns well with current industry trends.
