Defence Stocks Surge up to 19% After Potential Orders From Army; What Should Investors Do?


Defence Stocks Rally Today: The share price of defence companies continued their winning run on Monday after the Indian Army released a tender a day earlier, signalling new orders for guns, drones and vehicles among others. “We have invited the Indian defence industry to offer critical defence equipment for emergency procurement. Proposals are being fielded for guns, missiles, drones, counter-drone, loiter munition, communication and optical systems, specialist Vehicles, engineering equipment and alternate energy resources,” the Indian Army said on September 18.

Stocks Rally Up To 19 per cent after Indian Army issues tenders for buying guns, missiles, drones

Smallcap defence firm Apollo Micro Systems zoomed about 19 per cent to Rs 178.75. Mishra Dhatu Nigam (Midhani) soared more than 8 per cent to hit a new 52-week high of Rs 233.15, whereas Data Patterns (India) gained 7 per cent to Rs 1,266.35, its new record peak.

PSU major Bharat Dynamics (BDL) and smallcap defence player Rosell India gained 6 per cent each during the early trading hours, before giving up some gains. Paras Defence and Space Technologies and Zen Technologies advanced 4 per cent each, while Garden Reach Shipbuilders & Engineers was 3 per cent up.

Other state-owned defence sector firms, including Bharat Electronics (BEL) and Hindustan Aeronautics (HAL) were trading about 2 per cent higher.

Defence stocks have given positive gains to investors this year. Hindustan Aeronautics shares have performed the strongest and gained over 112 per cent. BEL shares have gained over 60 per cent and Paras Defence shares have risen nearly 4 per cent in the year so far. While the S&P BSE Sensex has risen 1.7 per cent in the year.

What Should Investors Do Now?

Punit Patni, Equity Research Analyst, Swastika Investmart, said the defence sector is poised to perform well on the back of strong ordering activity, the government’s thrust on indigenous manufacturing and export potential. “Additionally, strong balance sheets and reasonable valuations are cheery on the cake. We are positive about the sector and our top picks are BEL, HAL, and BDL,” he added.

Atul Suri, Founder & CEO, Marathon Trends– MS, told CNBC TV18 on September 19 said that the defence sector is overweight in his portfolio. He underlined that this investment theme was emerging for the first time in India and that too in a big way.

The local creation of these line replacement units (LRUs), subsystems, and components will boost the economy and lessen DPSU reliance on imports, said Mohit Nigam, Head – PMS, Hem Securities.

“It will support the local defence industry’s design capabilities and establish India as a design leader in these technologies. This action will further reduce the imports of defence,” he added.

Nigam remains positive on BDL, BEL, HAL, Mazagon Dockyard, Data Patterns, MTAR Technologies, Paras Defence, Garden Reach Shipbuilders & Engineers in the coming months.

Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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