Defence Production Reached All-Time High: Check Out These Defence Stocks

The Ministry of Defence declared on July 5, 2024, that the effective execution of policies and initiatives during the Financial Year (FY) 2023–2024 allowed India to record the greatest-ever rise in indigenous military manufacturing in value terms.

As per the information gathered from all Defence Public Sector undertakings (DPSUs), other PSUs that produce defence items, and private enterprises, the country’s defence production has reached a new height of ₹1,26,887 crore, signifying a 16.7% increase from the previous fiscal year. In FY 2022–2023, defence output was valued at ₹1,08,684 crore.

Approximately 79.2% of 2023–24’s total value of production (VoP) came from DPSUs and other PSUs, with the private sector accounting for the remaining 20.8%. According to the data, the private sector and DPSUs/PSUs have seen a consistent increase in defence output in terms of absolute value.

The accomplishment can be attributed to the government’s policy reforms, initiatives, and business-friendly policies implemented over the past ten years, with an emphasis on achieving self-reliance. The most vigorous and persistent indigenisation efforts have produced the highest-ever VoP.

Furthermore, the rise in domestic defence production has been greatly aided by the rapidly increasing defence exports. In FY 2023–24, defence exports reached a record high of ₹21,083 crore, up 32.5% from the previous fiscal year when they were ₹15,920 crore.

The value of defence production has grown by more than 60% over the last five years, starting in 2019–20.

Let us now have a look at these defence stocks based on 5Y CAGR:

Note: The stocks mentioned above have been selected from the Nifty 500 universe based on 5Y CAGR as of July 05, 2024

Conclusion

Investing in defence stocks provides a significant long-term opportunity as the sector is witnessing growth. However, proper research is necessary before investing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.