Defence Stocks Zoom on D-Street

Defence stocks are zooming. Mazagon Dock Shipbuilders, Bharat Electronics, Bharat Dynamics, Cochin Shipyard, Hindustan Aeronautics, Garden Reach Shipbuilders & Engineers, and Paras Defence are some of the buzzing stocks in this space, among others. On May 16, the NSE Nifty India Defence Index soared by 5 per cent intraday. Garden Reach Shipbuilders & Engineers and Cochin Shipyard have led from the front, with the former gaining a phenomenal 30 per cent since May 13.

Defence stocks are northward bound owing to strong earnings and success in Operation Sindoor, which demonstrated India’s prowess in the defence sector with advanced technologies. It showed the might of the Indian armed forced with indigenous weapons and superior homegrown technologies disproving India as a jugaad nation.

It reflected on the country’s bourses as Cochin Shipyard jumped over 12 per cent during the trading session and is up 33 per cent in the past five trading sessions. Garden Reach wasn’t far behind, climbing 11 per cent after doubling its Q4 net profit to Rs 224 crore and declaring a 138.5 per cent dividend payout. Cochin Shipyard also jumped 27 per cent in profits with a strong dividend.

Analysts believe the combined order books of Cochin Shipyard, Garden Reach Shipbuilders & Engineers and Mazagon Dock Shipbuilders are expected to more than triple by FY27, citing a strong government push for indigenisation, rising export potential, and recently cleared contracts worth Rs 54,000 crore.

Also, a powerful budget proposal makes the rally more meaningful. Sources indicate the defence budget is likely to get more firepower, with increased spending directed towards weapons, ammunition, and technology following Operation Sindoor. A supplementary budget proposal of Rs 50,000 crore is on the table, expected to receive approval in the Winter Session of Parliament. This signals policy support for continued defence sector growth.

Strong earnings are at play too. While Garden Reach posted 62 per cent revenue growth, Mazagon Dock and Paras Defence have seen major upticks. Bharat Dynamics and BEL also rode the wave with intraday gains between 4 and 8 per cent.

Analysts contend that long-term investors can go ahead and buy, citing the strong potential of India’s defence PSUs. But for short-term buyers, there is a caveat. They feel that such stocks are fraught with uncertainties due to a rash of global cues, firm performance, and macroeconomic factors.

Bombay Stock Exchangedefence stocks rallyinvestmentNews BriefOperation SindoorSensexWeb Exclusive