Defence shares in focus; Data Patterns, GRSE, BDL, Zen, Paras gain upto 11%

Analyst at Elara Capital believe defense companies in India stand to benefit as the EU defence OEM turn to public and private defence firms to procure components and subsystems.

Shares of defence-related companies were in focus on Friday, March 7, 2025, with most of the frontline stocks rallying up to 11 per cent on the National Stock Exchange (NSE) in intraday deals.

 

An upward movement in defence stocks came today, after the European Union (EU) announced a rearmament plan for the EU of EUR 800 billion (~$850 billion) including support of Ukraine after the US suspended military aid to that country.

 

At 11:03 AM, Nifty India Defence index, top gainer among the indices, was up 2.9 per cent at 5,678, as compared to 0.21 per cent rise in the Nifty50. However, the defence index has corrected 32 per cent from its 52-week high level of 8,302, the exchange data showed.

 

Among the individual stocks, Data Patterns (India) has rallied 11 per cent to Rs 1,299.20 in intra-day trade. Zen Technologies locked in upper circuit of 10 per cent at Rs 1,299.20, followed by Paras Defence and Space Technologies (9 per cent at Rs 978.45), Garden Reach Shipbuilders & Engineers (GRSE) (8 per cent at Rs 1,399) and Bharat Dynamics (BDL) (7 per cent at Rs 1,143).

 

Astra Microwave Products, Mishra Dhatu Nigam (MIDHANI), MTAR Technologies, Cochin Shipyard, Idea Forge and Mazagon Dock Shipbuilders were up in the range of 4 per cent to 5 per cent in intra-day trade.  READ: Nomura bullish on Indian steel industry; maintains 'Buy' on JSW Steel, JSPL

 

Analysts at Elara Capital believe defence companies in India stand to benefit as the EU defence original equipment manufacturers (OEM) turn to public and private defence firms to procure components and subsystems.

 

After the US suspended military aid to Ukraine, and seems to be favouring Russia, the EU has announced a five-part plan to bolster its defence industry and increase military capabilities, likely concerned about lack of US support.

 

India's defense exports have increased significantly in recent years, reaching a record Rs  21,000 crore in FY24 (Source: Defense Ministry). This is a 33 per cent increase from the previous fiscal year. India has set a defense exports target of Rs 30,000 crore by FY26. In this context, the new $850 billion plan by the EU provides a major opportunity for domestic public and private defence companies, especially for exports of subsystems and components to EU OEM, the brokerage firm said, in sector update.

 

Currently, the US, France and Armenia are the top three export countries for India; domestic companies to date have supplied weapons and equipment, such as the 155mm artillery guns, Akash air defence missile, Pinaka multi-launch rocket system, the BrahMos missile, artillery guns, Dornier-228 aircraft, radars, armored vehicles, fuselage and wings for aircraft & helicopters, bulletproof vests, night vision equipment and electronics.

 

Analyst believes potential beneficiaries could be Bharat Electronics, Hindustan Aeronautics, Bharat Dynamics, Data Patterns, Zen Technologies, Paras Defence, Solar Industries, Azad Engineering, Dynamatic Technologies and among unlisted names, Vem Technologies and SMPP.