Cochin Shipyard, GRSE to Bharat Dynamics: Defence stocks surge after Operation Sindoor, PM Modi’s speech. Time to buy?

Defence stocks witnessed a sharp surge on Wednesday, with shares of Garden Reach Shipbuilders & Engineers, Cochin Shipyard, Bharat Dynamics, Hindustan Aeronautics, and others rallying up to 18%. The rally followed the successful execution of Operation Sindoor and Prime Minister Narendra Modi’s address, in which he commended India’s growing defence capabilities.

The upbeat sentiment lifted the Nifty India Defence Index by over 3% on Wednesday, marking its fourth consecutive session of gains. The index has advanced nearly 13% in the last four sessions.

Garden Reach Shipbuilders & Engineers share price emerged as the top gainer, surging 18.25%, followed by Cochin Shipyard shares, which rallied 14%. Other notable gainers included Mishra Dhatu Nigam, DCX Systems, Unimech Aerospace and Manufacturing, Zen Technologies, and Mazagon Dock Shipbuilders, each posting gains in the range of 5–10%.

The sharp uptick in defence stocks was driven by renewed investor optimism after PM Modi’s remarks on the successful outcome of Operation Sindoor. Both the Indian Army and the Prime Minister highlighted the performance of indigenous defence systems — such as the Akash Surface-to-Air Missile (SAM) and electronic warfare systems — during the recent India-Pakistan conflict.

These homegrown defence technologies reportedly outperformed Chinese-origin systems deployed by Pakistan, underscoring India’s growing self-reliance and technological edge in defence.

Reinforcing India’s defence posture, PM Modi said, “The world saw how Pakistan’s drones and missiles fell like straws in front of India. India’s strong air defence system destroyed them in the sky itself.”

Modi described Operation Sindoor as a new paradigm in India's counter-terrorism strategy. “It is the new normal. We have only kept in abeyance our operations against Pakistan and the future will depend on their behaviour,” Modi said in his address.

Defence Stocks Outlook

While the India-Pakistan ceasefire declaration has put a hold to the current crisis, analysts believe it is not the end of the conflict. The escalated need for defence equipment and systems has come to the fore and the focus has now shifted on the execution of the order books to meet this expected demand.

“The great success of Indigenous defence systems such Akash SAM and electronic warfare have shown the reliability and effectiveness and has further strengthened the demand outlook. The need to fortify our borders and enhance our preparedness has established a continuous demand for defence equipments and is hugely positive for the defence companies from a strong growth in their order books and top line,” said Ashwini Shami, EVP & Sr. Portfolio Manager, OmniScience Capital.

According to him, the successful performance of Made in India defence systems against Chinese and other defence systems in Pakistan is also likely to magnify the demand for India-made defence equipment in the long run.

“This also showcased the modern style of remote warfare without too many personnel involved in direct engagement and the sophistication of the Indian systems and their integration with disparate systems from various countries, thus highlighting not only defence production but also India’s integration capabilities to make them work together,” Shami added.

Meanwhile, Antique Stock Broking continues to be positive on the Indian defence shipyards sector given strong order outlook, a robust policy framework favoring indigenization, and substantial government investment.

It expects the order-book of listed defence shipyards’ to swell by more than 3x in two years

The Defence Acquisition Council (DAC) has approved orders worth ₹8.45 lakh crore over FY22–25, which is almost 3.3x the same number for the preceding three years. The brokerage firm expects this to translate into significant order inflows in FY26–27 for defence shipyards.

Mega orders worth ₹2,35,400 crore lined up in FY26–27, approx 3.1x combined order book of the three listed defence shipyards, it said.

Antique Stock Broking has a ‘Buy’ rating on Mazagon Dock Shipbuilders shares with a target price of ₹3,433 apiece. It has a ‘Hold’ rating on Cochin Shipyards shares with a target price of ₹1,481. The brokerage firm also has a ‘Buy’ call on Garden Reach Shipbuilders & Engineers shares with a target of ₹2,024.

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.