List of Defence Stocks in India – June 2024

Embarking on the journey of stock market investing is a pivotal step towards financial growth. Among several sectors, one of the most popular is the defence sector. Defence stocks in India represent companies that are crucial to national security. These stocks encompass various facets, from aerospace and military technology to equipment manufacturing. In FY 2023, Defence exports reached an all-time high of approximately ₹16,000 crore, over a 10-times increase since 2016-17.

As India prioritises strengthening its defence capabilities, you can find the companies involved in this sector and potential opportunities. In this article, find 10 defence sector stocks in India and also learn about the growth of the industry.

List of 10 Defence Stocks in India

Note: The defence stocks list provided here is as of June 5, 2024, and is sorted as per the 5-yr CAGR.

Overview of the 5 Defence Stocks 

• Hindustan Aeronautics Ltd (HAL)

This is a large-cap company that manufactures, repairs and is involved in the maintenance of aircraft and helicopters. HAL is a state-owned aerospace and defence company in India. The company has a net profit margin of 23.59%, and the Return on Investment (ROI) is 24.94%.

• Bharat Dynamics Ltd

This is a small-cap company that designs and manufactures underwater-guided weapon systems. Bharat Dynamics Limited has a net profit margin of 22.43%, and the ROI is 11.11%.

• Cochin Shipyard Ltd

This is a small-cap company that manufactures and repairs ships. Cochin Shipyard Limited’s net profit margin is 18.92%, and the ROI is 6.94%.

• Solar Industries India Ltd

Solar Industries India Limited is involved in the manufacturing, supplying and exporting of industrial explosives and initiating systems. The net profit margin is 13.67%, and the Return on Investment is 21.48%.

• Bharat Electronics Ltd

Bharat Electronics Limited is a large-cap company that is involved in the design, manufacturing, and supply of electronics products and systems for defence and nondefense markets. Their primary products are weapon systems, fire control systems, radars, etc. The company’s net profit margin is 19.03%, and the ROI is 21.54%.

Recent Growth of the Defence Sector in India

In the Interim Budget 2024-25, the Defence Research and Development Organisation (DRDO) allocated US$2.9 billion (₹23,855 crore), while a corpus of US$12.0 billion (₹1 lakh crore) was designated for Deep Tech. This corpus offers long-term loans to tech-savvy companies, promoting innovation in defence technologies domestically.

There are several reasons why this increase in defence expenditure took place – the geopolitical reasons being the standoff against China in Ladakh and the spectacle of Russian equipment failing to perform well in Ukraine. The latter situation showed India three things –

• Availability and production of foreign equipment can be restricted at times when they are needed the most. The Russians are failing to replace their used precision weapons as some of the parts are made in other countries, who are now refusing or unable to supply them.
• Russian equipment, which comprises a major portion of the Indian Armed Forces, seems to perform not as well as the Western weapon systems.
• Western equipment, although of high quality, is extremely costly and hard to produce quickly in a mass – supplies to Ukraine have been slow as Western countries are reluctant to supply costly equipment that is also hard to replace in the short run.

Therefore, it is no surprise that the Indian government has been emphasising ‘Make in India’ in defence production.

As of 2022, India ranked fourth globally in defence expenditures and aims for annual defence exports worth US$6.02 billion (₹50,000 crore) by 2028-29.

War or no war, as the Indian economy grows, defence expenditure and orders for defence equipment and consultancy will surely grow in India and beyond in the coming years. With growing defence expenditure and geopolitical tensions, Indian defence companies can secure both domestic government and export orders.

Conclusion

Investing in defence stocks can offer a unique avenue for financial growth while contributing to the nation’s security. As the Indian defence sector evolves, investors can navigate this landscape for potential returns. However, make sure to consider your investment objective and risk appetite before proceeding further. Diversify your investment portfolio well to balance the risks. For those ready to embark on their investment journey, open a Demat Account with Angel One for free today.

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.

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