US-Iran war: It has been more than five weeks since the beginning of the Israel-US-Iran war. The geopolitical tension is yet to de-escalate, especially after Iran’s rejection of the 15-point plan suggested by US President Donald Trump. While the US-Israel and Iran are yet to reach any ceasefire terms, Russia has intensified attacks on Ukraine, and experts believe China may also fancy its chances of annexing Taiwan in the current geopolitical context. Therefore, the defence theme is expected to work in the medium to long-term.
According to market experts, amid sideways-to-negative trends on Dalal Street, defence is one segment expected to perform in the short to medium term. They said that Indian defence companies, developing drones, missiles, and aerospace equipment, are expected to gain amid the buzz around the defence theme. They also said that the Indian government has executed a series of defence deals with Germany, France, the EU, and Israel, which is expected to have a positive impact on the defence theme on Dalal Street.
Triggers for defence stocks
Highlighting the positive triggers for the Indian defence stocks, Seema Srivastava, Senior Research Analyst at SMC Global Securities, said that India’s defence sector is buzzing with recent deals with Germany, France, the EU, and Israel, boosting the country’s defence capabilities. The deals include India’s plan to acquire 22 Apache attack helicopters and 15 Chinook heavy-lift helicopters from Boeing, as well as a deal with France for 26 Rafale fighter jets. These agreements are expected to drive growth in India’s defence sector, with a focus on indigenous production and export opportunities.
Pointing to the US-Iran war, Sandeep Pandey, Co-founder of Basav Capital, said that geopolitical tensions in the Middle East have entered the sixth week, and there is no apparent truce. In fact, the Middle East tensions have allowed Russia to go against Ukraine with full force. The market was expecting a roadmap for the ceasefire during Donald Trump’s address to the nation, but he failed to provide one.
“Amid rising geopolitical tension, I won’t be surprised if China starts fulfilling its dreams of annexing Taiwan,” said Sandeep Pandey and advised long-term investors to add defence stocks to their portfolio. Pandey said that defence companies that deal in drones, missiles, and aerospace equipment are better placed than their peers.
Defence stocks to buy
Regarding stocks to buy amid rising geopolitical tensions, Seema Srivastava of SMC Global Securities said that HAL and BEL are well-positioned to benefit from this growth, given their strong order books and diversified portfolios. HAL’s revenue grew 10.7% YoY, with PAT rising 29.6% YoY, driven by robust execution and order book visibility. BEL’s revenue surged 23.7% YoY, with PAT up 20.8% YoY, backed by a diversified portfolio across radars, communication systems, and electronic warfare.
The SMC Global Securities experts, who is an ICAI-certified CA, said that BDL faces execution challenges and dependence on lumpy orders, making it a riskier bet. Mazagon Dock Shipbuilders is also an option for investors looking for exposure to the naval defence sector. India’s defence budget is expected to increase by 15.20% to ₹7.85 lakh crore in FY26-27, benefiting defence stocks. With a strong focus on indigenous production and export opportunities, HAL and BEL are attractive investment options, given their robust order books and diversified portfolios.
Besides defence stocks recommended by Seema Srivastava, Sandeep Pandey of Basav Capital said that investors may look at HAL, GRSE, Data Pattern, Zen Technologies, and MTAR Technologies shares for the medium to long term.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
