Over the past five years, the Indian defence sector has significantly advanced in its quest for self-reliance, propelled by initiatives such as Atmanirbhar Bharat and Make in India. The growing public-private sector collaboration also renders a robust and competitive defence ecosystem, resulting in superior wealth creation for investors.
In this blog, we will explore the top defence stocks in India that have generated substantial returns for investors over the past five years and continue to showcase substantial growth potential.
The Indian Defence Industry: A Synopsis
India ranks fourth globally in terms of military spending, with an estimated expenditure of nearly $81.4 billion in 2022, witnessing a jump of 6% from the previous year, based on data from the World Bank and it continues to grow.
In FY24, the Ministry of defence was allocated ₹5.94 lakh crore, marking a 13% increase from the previous year. The capital outlay of ₹1.62 lakh crores, or 57% of the overall budget, is allocated to modernization and infrastructure development. And, of this, nearly ₹1 lakh crore is earmarked for the domestic industry.
The surge in defence spending, coupled with heightened collaboration between the public and private sectors and the government’s emphasis on indigenization, has provided a substantial boost. Companies are establishing R&D centers and production lines in India, contributing to a significant export increase over the past decade.
India’s defence exports have witnessed a remarkable growth of 23 times, increasing from ₹686 crores in FY14 to almost ₹16,000 crores in FY23. According to the Ministry of Defence, India is now exporting weapon systems to over 85 countries, and approximately 100 companies are actively exporting defence products.
Also, the number of listed defence companies has grown in the last five years, creating massive wealth for investors. Let’s check out some of the best defence stocks in India.
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Top 10 Defence Sector Stocks in India
- Hind.Aeronautics
- Bharat Electron
- Solar Industries
- Cochin Shipyard
- Bharat Dynamics
- Garden Reach Sh.
- BEML Ltd
- Data Pattern
- Zen Technologies
- Mishra Dhatu Nig
Top Listed Defence Sector Shares in India: An Overview
1. Hindustan Aeronautics Limited (HAL)
HAL is India’s premiere state-owned aerospace and defence manufacturer, which was incorporated as Hindustan Aircraft Limited on 23rd December 1940 to manufacture aircraft in India. Over the years, the company, through various license manufacturing activities and research & development activities, has developed expertise in the design of fixed-wing and rotary-wing aircraft. It also supplies crucial hardware to the Indian Air Force.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 5540.5 | 370534.81 | 197.74 | 75.34 | 30.58 | 5670 | 48.78 |
In March 2024, the company recorded an 12.82% growth in revenue from operations to ₹30,381 crores, from ₹26,927 crores in March 2023. And recorded a net profit of ₹7,594 crores, up 30% from ₹5,824 crores.
And, in Q1FY24, revenue from operations increased to ₹14,768 crores from ₹12,494 crores in Q1FY23. It recorded a net profit of ₹4,296 crores against ₹2,844 crores.
2. Bharat Electronics Limited (BEL)
BEL was established in 1954 and manufactures specialized electronic equipment requirements for the Indian armed forces. The company’s shares were listed in 2000, becoming the first defense PSU to get Mini Ratna Category I status.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 334.55 | 244548.79 | 172.03 | 56.54 | 29.92 | 342 | 61.39 |
In March 2024, the company reported revenue from operations of ₹20,268 crores, as against ₹17,734 crores. Net profit increased to ₹3,943 crores from ₹2,940 crores.
Q1FY24 total income increased to ₹8,564 crores from ₹6,479 crores in Q1FY23. Net profit was ₹1,785 crores as against ₹1,366 crores.
3. Solar Industries India
Solar Industries is a leading explosives manufacturer established in 1995 and is into manufacturing industrial and military explosives, ammunition, propellants, bombs & warheads, initiating systems & pyros, and integration of rockets.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 12126 | 109728.3 | 244.12 | 60.14 | 36.11 | 12539.25 | 119.3 |
The consolidated revenue in March 2024 registered a drop of 12.3% growth to ₹6,069 crores from ₹6,922 crores in March 2023. And, profit after tax during the period was up more than 7% to ₹874 crores, compared to ₹811 crores the previous year.
In Q1FY24, the total income has grown to ₹1,610 crores from ₹1,928 crores in Q1FY23. Net profit increased to ₹240 crores from ₹220 crores the previous year.
4. Cochin Shipyard Ltd.
Cochin Shipyard is India’s leading shipbuilding yard, conceived in 1969, and offers shipbuilding, ship repair, marine engineering, and related services. INS Vikrant, India’s first aircraft carrier to be built in India, was constructed by Cochin Shipyard.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 2789.7 | 73391.62 | 862.72 | 71.94 | 8.66 | 2979.45 | 90.31 |
The company’s revenue from operations for March 2024 amounted to ₹3,830 crores, compared to ₹2,364 crores. And, net profit for the year was ₹783 crores, a decrease from ₹304 crores in March 2023.
Q1FY24 revenue is reported at ₹1,286 crores compared to ₹1,056 crores in the same period the previous year. And, profit after tax during the period is ₹258 crores as against ₹244 crores.
5. Bharat Dynamics Limited (BDL)
BDL is a state-owned defence equipment manufacturing company established in 1970 and specializes in manufacturing ammunition and missile systems. It has developed Akash Missile Systems, Astra Weapon System, Anti-submarine Warfare Suite, and many other platforms and systems.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 1679.9 | 61578.88 | 214.12 | 62.49 | 15.56 | 1794.7 | 100.48 |
In March 2024, the company achieved a sales turnover of ₹2,369 crore as against ₹2,489 crore in the previous financial year. And achieved a profit after tax of ₹612 crores compared to ₹352 crores in March 2023.
For Q1FY24, the company’s sales turnover is ₹854 crores compared to ₹798 crores in the same period the previous year. Net profit increased to ₹288 crores as against ₹152 crores in Q1FY23.
6. Garden Reach Shipbuilders & Engineers Ltd. (GRSE)
GRSE is a Kolkata-based shipbuilding and repair company incorporated in 1884. The company is involved in shipbuilding, heavy engineering, and ship engine development.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 2544.2 | 29144.22 | 348.5 | 85.58 | 20.3 | 2834.6 | 81.65 |
In March 2024, revenue from operations grew by 40% to ₹3,592 crores from ₹2,561 crores in March 2023. Similarly, profit during the period also increased by 56% to ₹357 crores from ₹228 crores.
And, in Q1FY24, the revenue from operations increased to ₹1,015 crores from ₹601 crores. Net profit for the period increased to ₹111 crores from ₹55 crores in Q1FY23.
7. BEML Limited
BEML Limited, formerly known as Bharat Earth Movers Limited, is an Indian public sector undertaking that manufactures a variety of heavy equipment. Established in May 1964, BEML plays a pivotal role in India’s core sectors, including Defence, Rail, Power, Mining, and Infrastructure. The company is listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Government of India owns 54.03%, and the remaining 44.97% is held by financial institutions, foreign institutional investors, banks, the public, and employees. BEML operates nine manufacturing units across various locations in India, including Bangalore, Kolar Gold Fields, and Mysore. From a modest turnover of Rs. 5 crores in 1965, BEML has grown to achieve a turnover of more than Rs. 4,300 crores today .
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 4968.9 | 20690.47 | 232.15 | 47.52 | 10.48 | 5489.15 | 73.42 |
The company’s revenue from operations for March 2024 amounted to ₹4,054 crores, compared to ₹3,898 crores. And, net profit for the year was ₹281 crores, a decrease from ₹157 crores in March 2023.
Q1FY24 revenue is reported at ₹1,513 crores compared to ₹1,387 crores in the same period the previous year. And, profit after tax during the period is ₹256 crores as against ₹157 crores.
8. Data Patterns
Data Patterns is a vertically integrated defence and aerospace electronics solution provider with expertise in developing radar systems, electronic warfare, rugged displays, fire control systems, launch vehicle check-outs, avionic systems, and many more.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 3269.15 | 18302.08 | 74.35 | 19.67 | 3655 | 103.04 |
In March 2024, the company’s total revenue increased by 14% to ₹519 crores from ₹453 crores. And, net profit increased to ₹181 crores from ₹124 crores in March 2023.
In Q1FY24, total revenue increased to ₹182 crores from ₹185 crores in Q1FY23. And, profit for the period increased to ₹71 crores from ₹55 crores.
9. Zen Technologies
Zen Technologies Limited, incorporated in 1993, designs, develops, and manufactures state-of-the-art Combat Training Solutions for Defence & Security Forces worldwide. They are also leaders in providing Counter-Drone Solutions for safeguarding borders and critical infrastructures. Headquartered in Hyderabad, India, Zen Technologies has offices in India, UAE, and the USA. Their portfolio includes over 40 indigenously developed products, ranging from Live Fire, Live Instrumented, Virtual, and Constructive training systems to Counter Drone Solutions. With more than 1,000 simulators and training systems shipped globally, Zen Technologies is a proven leader in building Combat Readiness training systems. They have a strong R&D focus, with over 150+ patents filed or received. Zen Technologies is an ISO 9001:2015 (QMS), ISO/IEC 27001:2013 (ISMS), and CMMI Maturity Level 5 Company.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 1336 | 11228.37 | 225.73 | 82.89 | 23.18 | 1487 | 88.75 |
In FY23, the company witnessed a 215% jump in revenues to ₹218 crores, compared to ₹69 crores in FY22. Similarly, net profit increased by 2350% to ₹49 crores from ₹2 crores.
For Q1FY24, the company’s total revenue increased to ₹141 crores from ₹95 crores in the same period the previous year. And, net profit for the period was at ₹37 crores compared to ₹23 crores in Q1FY23.
10. Mishra Dhatu Nigam Limited
Mishra Dhatu Nigam Limited (MIDHANI), abbreviated as MIDHANI, is a specialized metals and metal alloy manufacturing facility in India. It was incorporated in 1973 at Hyderabad as a Government of India Enterprise under the Ministry of Defence. MIDHANI manufactures superalloys, titanium, special-purpose steel, and other special metals.
| CMP Rs. | Mar Cap Rs.Cr. | 1Yr return % | 5Yrs return % | ROCE Prev Yr % | All time high Rs. | P/E Ratio |
| 521.85 | 9776.33 | 72.78 | 33.53 | 14.64 | 547.5 | 107.18 |
In March 2024, total income increased by 23% to ₹1072 crores from ₹871 crores in March 2023. And, net profit decreased by 41% to ₹91 crores from ₹155 crores in March 2023.Revenue for Q1FY24 rose from ₹405 crores to ₹344 crores. And, net profit after tax during the period is ₹46 crores, compared to ₹66 crores in Q1FY23.
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Factors to Consider Before Investing in the Defence Sector in India
Over the years, we have seen a dynamic shift in military strategies, technologies, and doctrines. The warfare has witnessed a transformative journey integrating advanced technologies, cyber capabilities, artificial intelligence, and unconventional tactics.
Therefore, we continue to witness a sustained rise in government investments in the defence sector to adapt to evolving dynamics, contributing to its status as an evergreen sector. Also, companies engaged in the production and services of defence equipment are poised for continued growth.
The following are the things to consider if you’re thinking about buying Indian defence stocks:
Government Regulation and Policies: It is one of the key factors influencing the growth of the defense sector in any economy. Investors should carefully monitor and analyze the government policies and regulations related to defence procurement, licensing, and rules about foreign direct investments.
Budget Allocations: The growth of the defence sector is highly dependent on governmental spending. Analyzing the government’s budgetary allocation to defence sector and captial outlay for the procurement of weapon systems provides critical insights. Increased funding often indicates growth.
Technological Advancements: You must keep up-to-date on technological advancements in the defense sector and how companies adapt to modern warfare needs.
Collaboration and Partnerships: defence companies often collaborate with governmental and foreign units for product development. You need to assess the collaborations and partnerships of the companies as they can indicate growth prospects.
Domestic & Global Demand: Assessing the overall domestic and global demand for defense products, considering geopolitical dynamics and security concerns, gives vital insight into the trend in the sector.
Financial Health of Companies: Before investing, assess the financial health and stability of the defence companies, considering factors like profitability, debt level, order book, and other key ratios.
Conclusion
The defence sector offers a unique opportunity for investors to participate in the growth of a critical and resilient industry. Evolving geopolitical dynamics, increased governmental spending, advancement of technologies, and government push for local manufacturing of defense equipment showcase the strong growth potential of defense stocks in India.
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FAQs on Defence Stocks
Which defence stock is best?
Defense stocks or companies with a proven track record in product development, a healthy order book, and stable finances are considered best to invest in.
Which stocks to buy during the war in India?
Defense stocks are considered best to buy during the war because of the increased demand for weapons and ammunition, which results in healthy profits for companies.
Why are defence stocks rising?
The surge in defense stocks can be attributed to a hike in the defense budget, supportive policies for domestic production and procurement, a focus on indigenization, growth in order books, and robust financial performance by the companies.
I’m Archana R. Chettiar, an experienced content creator with
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