Defence stocks: BEML, Dynamatic Tech, Cochin Shipyard, and other defence constituents of the Nifty Defence index have kick-started September on a positive note after being under pressure for two straight months.
Though the sector outlook remains promising, the lofty valuations and sector rotations have kept defence stocks out of investors’ radar. The easing of geopolitical tensions globally has also made these counters unattractive for Dalal Street investors.
Nevertheless, investors’ interest seems to be coming back to the sector, as the shares of BEML surged 7% in the current week so far, reaching ₹4,149 apiece. If BEML stock closes the week with a gain of over 6%, it will mark the biggest weekly gain since mid-June.
Dynamatic Technologies shares have gained 3.27%, while Cochin Shipyard shares have rallied 2.5% so far, which is a notable turnaround after ending the last two months with heavy losses of 9% and 14.3%, respectively.
Meanwhile, its peers Garden Reach Shipbuilders and Mazagon Dock Shipbuilders have advanced 1.9% each this week so far, following a two-month decline. Likewise, Mishra Dhatu Nigam shares recovered 5% this week so far after a cumulative two-month drop of 17%.
After three months of losses, Paras Defence and Cyient DLM shares have also shown momentum, gaining 1.5% and 1.22%, respectively. Other stocks, such as Data Patterns and Hindustan Aeronautics, have gained 2.38% and 1.57%, respectively.
In contrast, some defence stocks continue to bleed, with Bharat Dynamics, Astra Microwave, and Unimech Aerospace losing up to 2.6% this week so far.
Defence PSUs trail private peers in Q1 performance
Domestic brokerage firm Choice Institutional Equities, in its latest note, said that defence PSUs reported weak performance in the June-ending quarter compared with private sector peers, which demonstrated stronger YoY momentum, albeit on a smaller base.
Defence PSUs such as HAL, BEL, and BDL contributed the bulk of sector revenue, accounting for 90% of the total, and reported an 8.2% YoY increase to ₹95,066 million. Net profit stood at ₹23,525 million (+5.7% YoY), reflecting steady performances from HAL and BEL.
The brokerage noted that private sector players such as Data Patterns, DCX Systems, Astra Microwave, Centum, Apollo, and Azad delivered robust growth, with revenue rising 27.9% YoY to ₹10,653 million. PAT surged 50.9% YoY to ₹975 million, underscoring scalability and rising order execution.
Overall, the defence sector posted 9.9% YoY revenue growth to ₹1,05,719 million, while EBITDA rose 32.2% YoY, with margins expanding 423 bps to 25.2%.
Defence sector outlook remains bright
India’s defence sector is at an inflection point, poised for a structural growth cycle.
“We see production nearly tripling, from ₹94,845 crore in FY22 to ₹3 lakh crore by FY29E (18% CAGR), driven by aggressive indigenisation, supportive procurement policies, and growing private-sector integration. We believe the private players’ 23% share would rise significantly as system integration & advanced tech solutions scale up,” said the brokerage.
Exports are emerging as a key lever, likely crossing ₹50,000 crore by FY29E, cementing India’s position as a credible global supplier. Partnerships with global OEMs and rising trust in indigenous platforms—ranging from AI-enabled drones to naval systems—add further conviction.
With a sustained capex cycle, PSU-private collaboration, and tech-led differentiation, the brokerage believes India’s defence sector offers one of the most compelling multi-year growth opportunities in manufacturing.
Disclaimer: This story is for educational purposes only. 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.
