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4w ago

India’s Defence Industry Maintains Momentum Despite Ceasefire-Led Stock Pullback

Strong government spending underpins long-term growth with ambitious export targets reinforcing investor confidence during a period of stock valuation correction.

Defence rally showing signs of froth; expert recommends short-term caution
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A man passes by the Bombay Stock Exchange (BSE) building on the day of Union Budget 2025-26 presentation, in Mumbai. File image/PTI

Overview

  • The Union Budget for FY26 set defence outlays at Rs 6.8 lakh crore with Rs 1.9 lakh crore earmarked for capital expenditure, and InCred Equities projects a 10% rise to Rs 7.49 lakh crore for FY27.
  • The Make in India initiative is driving a push to more than double defence exports from Rs 23,600 crore in FY25 to Rs 50,000 crore by FY30 to strengthen indigenous manufacturing.
  • Defence stocks added over Rs 3.12 lakh crore to market capitalization in six months but a tentative ceasefire between Iran and Israel prompted profit taking that sent GRSE and IdeaForge down as much as 6%.
  • Brokerage Jefferies highlights a robust order book and strong earnings visibility over the next five years, naming HAL, Data Patterns and BEL as top sector picks despite short-term froth warnings.
  • Global defence spending plans by NATO and demonstration of indigenous systems during Operation Sindoor are creating fresh export prospects and underpinning a project pipeline valued at more than Rs 8.7 lakh crore.