Best Defence Stocks in October 2024 – 5yr CAGR Basis

India is recognised as one of the strongest military forces globally and is strategically important to its government. The three largest market segments in the Indian defence sector are military fixed-wing aircraft, naval vessels and surface combatants, and missiles and missile defence systems. Other notable segments include submarines, artillery,  military rotorcraft, tactical communications, electronic warfare, and military land vehicles. In this article, let’s look at some of the best defence stocks in India for October 2024 based on the 5-year CAGR. 

Best Defence Sector Stocks in October 2024 – 5yr CAGR Basis

Note: The best defence  sector stocks listed in India here are sorted as per the 5-yr CAGR as of September 27, 2024. 

Overview of Best Defence Stocks in India in October 2024

• Taneja Aerospace & Aviation Ltd

Taneja Aerospace & Aviation Ltd, founded in 1994, is part of the Pune-based Indian Seamless group. The company is involved in making and selling parts and components for the aviation industry. It also offers airfield, maintenance, repair, and overhaul (MRO) services, along with other related services.

For the quarter ended June 2024, the company’s revenue increased to ₹9.14  crore from ₹8.19 crore in the preceding quarter. Meanwhile, the net profit decreased to ₹3.47 crore from ₹2.52 crore in the previous quarter. 

Key metrics: 

• Earning per share (EPS): ₹4.38
• Return on equity (ROE): 8.56%
• High Energy Batteries Ltd

High Energy Batteries Ltd (HEBL) was founded in response to a request from the Directorate of Technical Development and Production (Air) of the Government of India. Its main goal is to develop and manufacture 45-Ah silver oxide zinc aircraft batteries to replace imported batteries and other high-energy batteries. Since 1982, HEBL has been conducting its own research and development to create other types of silver oxide zinc batteries. 

For the quarter ended June 2024, the company’s revenue decreased to ₹17.31 crore from ₹19.88 crore in the preceding quarter. Meanwhile, the net profit decreased to ₹2.88 crore from ₹4.70 crore in the previous quarter. 

Key metrics: 

• EPS: ₹15.72
• ROE: 16.07%
• Sika Interplant Systems Ltd

Sika Interplant Systems Ltd is an engineering company that focuses on offering products, systems, and services for the Aerospace, Defence & Space, and Automotive sectors in India. The company operates in four main areas: engineering (design and development), manufacturing, assembly and testing, project and systems integration, and maintenance, repair, and overhaul (MRO). 

For the quarter ended June 2024, the company’s revenue decreased to ₹30.42 crore from ₹37.16 crore in the preceding quarter. Meanwhile, the net profit decreased to ₹5.30 crore from ₹6.10 crore in the previous quarter. 

Key metrics: 

• EPS: ₹49.99
• ROE: 20.50%
• Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd is an Indian company that specialises in aerospace and defence, focusing on manufacturing and maintaining aircraft and helicopters worldwide. The Ministry of Defence of the Government of India owns it. The company provides a variety of products, including aerospace equipment, helicopters, aircraft, communication and navigation equipment, advanced weapon system integration for light helicopters, advanced communication devices, light combat helicopters, intermediate jet trainers, aero engines, and accessories for helicopters, aircraft, and aero engines.

For the quarter ended June 2024, the company’s revenue decreased to ₹4,347.57 crore from ₹14,768.78 crore in the preceding quarter. Meanwhile, the net profit decreased to ₹1,435.59 crore from ₹4,292.04 crore in the previous quarter. 

Key metrics: 

• EPS: ₹122.86
• ROE: 28.29%
• Bharat Dynamics Limited

Bharat Dynamics Limited (BDL) is a leading defence public sector unit (PSU) in India that manufactures surface-to-air missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), underwater weapons, launchers, Countermeasures Dispensing Systems (CMOS), and test equipment. The company also refurbishes and extends the life of stored and deployed missiles. 

For the quarter ended June 2024, the company’s revenue decreased to ₹191.17 crore from ₹854.12 crore in the preceding quarter. Meanwhile, the net profit decreased to ₹7.22 crore from ₹288.78 crore in the previous quarter. 

Key metrics: 

• EPS: ₹15.77
• ROE: 15.90%

Defence Industry Outlook

The Indian government is focusing on innovative solutions to strengthen the country’s defence and security through the “Innovations for Defence Excellence (iDEX)” initiative. This program connects start-ups with defence organisations to develop new technologies and products over the next 5 years (2021-2026). By collaborating with partner incubators, iDEX has encouraged the start-up community to participate in the Defence India Start-up Challenge (DISC) program.

In September 2020, to enhance the defence sector and attract FDI, the government revised regulations to allow FDI of up to 74% under the automatic route and 100% through the government route in areas likely to provide access to modern technologies. The Defence Ministry aims for 70% self-reliance in weaponry by 2027, creating significant opportunities for industry players. The Green Channel Status Policy (GCS) was introduced to encourage private sector investment in defence production, promoting their role in the industry. With the government’s focus on easing restrictions on foreign investment to achieve the goal of “Atmanirbhar Bharat,” the growth potential of the Indian defence sector remains strong.

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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.