BEML, HAL, BEL and other defence stocks rally up to 5%; Why the optimism?

Defence stocks: Majority defence stocks edged higher up to 5.6 per cent in trade on Friday, March 21, 2025, after the Centre approved faster defence procurement guidelines along with granting preliminary approvals for military procurement proposals worth over ₹54,000 crore. 

 

Around 10:40 AM, shares of Astra Microwave Products were up 3.16 per cent, Hindustan Aeronautics or HAL were up 3.15 per cent, MTAR Technologies were up 2.89 per cent, Bharat Dynamics were up 2.51 per cent, BEML were up 2.34 per cent, Paras Defence and Space Technologies were up 1.97 per cent, Data Patterns (India) were up 1.78 per cent and Bharat Electronics were up 0.37 per cent. 

 

As per domestic brokerage Antique, with project approvals worth Rs 2.2 ttillion in year-to-date (Y-T-D) FY25, defence public sector undertakings (PSUs) have strong growth opportunities in the near to long term. 

 

The brokerage has maintained a 'Buy' rating on these companies with a target price of ₹19,639 for PTC Industries, ₹376 for BEL, ₹1,351 for Bharat Dynamics, ₹4,887 for HAL, ₹2,757 per share. 

Reason why Defence stock rose in trade 

 

The development came after the final approval was granted for procuring 307 indigenous artillery guns at a cost of nearly ₹7,000 crore. Defence Minister Rajnath Singh said that guidelines to reduce timelines at “various stages of the capital acquisition process to make it faster, more effective, and efficient” were approved by the Defence Acquisition Council (DAC). 

 

This move aims to transform armed forces into a “technologically advanced, combat-ready force capable of multi-domain integrated operations” and aligns with the government's decision to observe 2025 as the Year of Reforms. 

 

The DAC also granted Acceptance of Necessity (AoN) for eight capital acquisition proposals worth over ₹54,000 crore. These include more powerful engines for the Army’s T-90 tanks to improve battlefield mobility, particularly in high-altitude areas; procurement of the indigenous Varunastra ship-launched anti-submarine torpedo for the Indian Navy; and acquisition of Airborne Early Warning & Control aircraft systems for the Indian Air Force.

 

Prior to this, the Cabinet Committee on Security, chaired by Prime Minister Narendra Modi, approved the procurement of the Advanced Towed Artillery Gun System (ATAGS) for the Indian Army, according to reports. The contract — covering 307 artillery guns and 327 gun-towing vehicles for 15 artillery regiments — is expected to be signed next week.