Defence stocks surge up to 20% with Paras Defence, HAL, Garden Reach Shipbuilders, Mazagon Dock at record highs

Defence stocks surged by up to 20 percent in intra-day deals on Tuesday, building on double-digit gains from the previous week. Paras Defence and GRSE led the rally, reflecting heightened investor optimism.

Shares of Paras Defence were locked in the 20 percent upper circuit at their record high of ₹1,388.70 apiece following a block deal involving 1.8 percent of the company’s equity (3.29 lakh shares). Meanwhile, Garden Reach Shipbuilders surged almost 15 percent to its new high of ₹1,627.85. Both these stocks have given robust returns in June so far, jumping 51 percent and 32 percent, respectively.

Furthermore, shares of Hindustan Aeronautics Limited (HAL), the manufacturer of Tejas, surged by 7 percent to reach an all-time high of ₹5,565.35 apiece. This rally was fueled by the Ministry of Defence issuing a request for a proposal to procure 156 Light Combat Helicopters from the PSU. The tender, valued at approximately ₹50,000 crore, marks the largest single order for helicopter acquisition awarded to an Indian company, underscoring HAL's significant role in the defence sector. The stock has added over 11 percent in the current month to date.

Also, Mazagon Dock rallied 8.8 percent to its record high of ₹4,219. It has also advanced almost 30 percent in June so far. Astra Microwave Products also hit a new peak of ₹1,059.75, jumping almost 10 percent in intra-day deals.

Meanwhile, other defence stocks also gained. Ideaforge Tech rallied 10 percent, Zen Tech surged over 8 percent, Bharat Dynamics rose 4.2 percent, and Bharat Electronics increased 3.7 percent.

Defence stocks have been in focus with investor interest soaring following Defence Minister Rajnath Singh's ambitious plans to boost India's defence exports and strengthen domestic manufacturing under the 'Make in India' initiative. Singh's announcement, aimed at achieving annual defence exports of ₹50,000 crore and fast-tracking indigenous production, has sparked renewed optimism in the sector. His emphasis on scaling up defence capabilities aligns with India's broader strategic goals and underscores the government's commitment to self-reliance in defence. This proactive stance has not only bolstered market sentiment but also positioned defence-related stocks favorably for potential growth opportunities ahead.

Nomura, a Japanese brokerage firm, recently emphasised on India's burgeoning defence sector, projecting a substantial ordering opportunity of $138 billion spanning FY24 to FY32. This forecast is underpinned by increasing demand for advanced defence equipment, technologies, and services, signalling robust growth potential for firms engaged in defence production and technology development.

Earlier projections by Nomura indicate a significant upward trajectory in India's defence capital expenditure (capex), with the share expected to rise to 37 percent of the total budget by FY30, up from 29 percent in FY25. This surge implies a cumulative capital outlay of approximately ₹15.5 lakh crore from FY24 to FY30, doubling the ₹7.8 lakh crore spent from FY18 to FY24. In the interim budget for FY2024–25, the Ministry of Defence received a total allocation of $74.8 billion ( ₹6,21,540.85 crore).

The Japanese brokerage firm remains optimistic about Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL), considering them well-positioned to benefit from these developments.

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