Defence stocks were in the spotlight on Thursday, 17 September, as investors stepped in for value buying, while the sector continued to draw attention because of its long-term growth prospects.
The gains were broad-based, with names across defence manufacturing, electronics, aerospace and engineering companies moving higher even as the benchmark Nifty remained flat.
Paras Defence and Space Technologies jumped 4.5% to ₹1,379.10, leading the gains among the defence counters in focus. Data Patterns rose 4.2% to ₹4,506.05, while MTAR Technologies advanced 3.8% to ₹7,060.
BEML added 3.6% to ₹2,066.05, and Apollo Micro Systems gained 3.5% to ₹382.90.
Among other stocks, GRSE rose 2.3%, while Bharat Forge and Bharat Electronics (BEL) gained 2% each. HAL was up 1.5%, while BDL and Zen Technologies advanced 1%.
The Nifty India Defence Index rose 1.3%, compared with a flat Nifty, highlighting the relative strength seen across the defence segment.
DAC approves ₹1.1 lakh crore acquisition proposals
A major trigger for the sector has been the government’s continued push to expand defence procurement and strengthen domestic manufacturing capabilities.
Earlier this month, on September 8, the Defence Acquisition Council (DAC) approved Acceptance of Necessity (AoN), or in-principle administrative approval, for various acquisition proposals of the Defence Forces worth an estimated ₹1,10,000 crore.
The approvals cover multiple acquisition proposals for the Indian Army, Navy and Air Force, with the overall estimated value standing at about ₹1,10,000 crore.
“Chaired the meeting of Defence Acquisition Council (DAC) today. The DAC accorded Acceptance of Necessity (AoN) to various acquisition proposals of the Defence Forces at an estimated cost of about ₹1,10,000 crore. Of the total AoNs accorded, approximately 98% of procurements will be made from the Indian Industry. It shows our commitment towards developing a strong defence Industrial base in India,” Defence Minister Rajnath Singh said in a tweet.
For the Indian Army, the approvals cover Chemical Biological Radiological and Nuclear (CBRN) Recce Vehicles, High Mobility Vehicles (HMV), Self-Propelled Mechanical Mine Layers (MML), Advanced Light Helicopters (ALHs), Trawl Tanks and the Sarvatra Bridge System.
The size of the approvals has added to expectations of a sizeable procurement opportunity for domestic defence companies, particularly as the government continues to emphasise indigenous sourcing.
Defence sector outlook
Brokerages have remained constructive on the sector, pointing to the expanding acquisition pipeline, higher domestic sourcing and the government’s continued efforts to build indigenous defence capabilities.
In a September 8 note, Antique Stock Broking said it remained constructive on the defence sector, supported by the expanding pipeline of acquisition programmes, increasing domestic sourcing and the government’s continued focus on strengthening indigenous defence capabilities.
However, Antique Stock Broking said that faster conversion of AoNs into contracts remains critical for translating the sizeable procurement pipeline into sustained revenue and order-book growth.
Its top picks included Mazagon Dock, HAL, BEL and Astra Microwave.
Meanwhile, Motilal Oswal Financial Services Ltd (MOFSL) also remained positive on the defence sector following the DAC’s approval of ₹1.1 lakh crore of AoN proposals covering the Army, Navy and Air Force.
The brokerage said DAC approvals during FY27 so far had reached ₹1.62 lakh crore. Across FY25 to year-to-date FY27, approvals worth ₹13 lakh crore had been accorded for the Indian defence sector, which MOFSL said was expanding the total addressable market for domestic defence companies.
MOFSL also highlighted government measures aimed at opening missile production to Indian private-sector players, which it said had improved visibility for future order inflows across the sector.
“In the near to medium term, finalisation of large tenders for defence PSUs should be keenly watched out for. We reiterate our positive stance on the sector and maintain Bharat Electronics (BEL) as our preferred pick,” MOFSL said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
