US-Iran war: Defence stocks like Hindustan Aeronuatics (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics fell in Monday’s trading session after escalation in the US-Iran war.
HAL shares declined over 0.58% to ₹4,474 apiece, while shares of BEL and Bharat Dynamics dropped 0.78% and 0.55%, respectively, during Monday’s trading session.
US-Iran war update
The defence stock witnessed a setback after Iran said the ceasefire with the US had effectively broken down, heightening concerns over potential disruptions to energy shipments through the Strait of Hormuz.
According to the US Central Command, the United States carried out its ninth straight night of strikes on Iran, aiming to weaken the country’s military capabilities used in attacks on commercial vessels and civilian mariners. Meanwhile, Kuwait said it had intercepted Iranian drone attacks.
The Iranian Navy was quoted as saying by Bloomberg that it stopped four unidentified vessels attempting to navigate an “unsafe route” through the Strait of Hormuz after they ignored repeated warnings. Two of the vessels were halted after meeting with accidents, while the remaining two turned back.
Separately, the UK Maritime Trade Operations said military authorities had reported a vessel on fire northwest of Kumzar, Oman, though the cause of the incident remains unconfirmed.
The conflict has intensified after a week of reciprocal attacks, expanding beyond military targets to include bridges, utility infrastructure and port facilities, reducing hopes of restoring the already fragile ceasefire. Kuwait Petroleum Corp. said an Iranian strike on Saturday caused significant damage to one of its oil facilities.
Kuwait was the primary target of Iran’s retaliatory strikes over the weekend, while Bahrain also came under attack. On Sunday, Israel said it had intercepted an Iranian drone near its border with Syria. Meanwhile, US forces carried out strikes on Qeshm Island in the Persian Gulf and in southern Iranian cities, including Shadegan, according to Iranian media reports.
The United States has reinstated its blockade of the Strait of Hormuz, while Iran’s attacks on vessels near the strategic waterway have disrupted the “shuttle run” operations used by Persian Gulf oil producers to transport cargo.
Meanwhile, Harshal Dasani, Business Head – INVasset PMS, believes that the consolidation in defence stocks is the market working through a gap that was created two years ago and never fully closed. The PSU defence rally of 2023-24 was built almost entirely on order-book announcements, with HAL, BEL, Bharat Dynamics, Mazagon Dock, and the broader cluster re-rating three to five fold as procurement approvals, DAC clearances, and indigenisation headlines compounded into a narrative of permanent earnings acceleration.
“The problem is that order books are not earnings. Defence execution runs on long conversion cycles, with platform deliveries stretching five to ten years, milestone-based revenue recognition, and supply-chain dependencies that make annual execution growth structurally slower than the order-inflow headlines suggest. The result is that valuations moved years ahead of the P&L, and the sector has been carrying multiples that price flawless multi-year execution while reported revenue growth has run at a fraction of the order-book growth. That is the gap now being consolidated. With the geopolitical premium fading as regional tensions ease, the market has lost the sentiment cover that was masking the arithmetic, and the repricing is bringing multiples back toward what the actual execution cadence supports,” Dasani said.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
