Defence stocks in focus; Bharat Dynamics, Garden Reach, HAL rally up to 5%

R&D spending by India's defense PSUs over the next five years is slated to increase with a projected expenditure of ₹32,766 crore, exceeding ₹30,952 crore invested in the past 10 years.

Defence companies share price today

 

Shares of defence companies, public as well as private sector, were in focus and rallied up to 8 per cent on the National Stock Exchange (NSE) in Monday’s intra-day trade amid heavy volumes.

 

Dynamatic Technologies was up 8 per cent to ₹9,208.50 on the NSE in intra-day trade. Garden Reach Shipbuilders & Engineers (₹2,748) and Bharat Dynamics (₹1,520) surged 5 per cent each, while Hindustan Aeronautics soared 4 per cent to ₹4,792.

 

Data Patterns (India), Cochin Shipyard, Paras Defence and Space Technologies, Mazagon Dock Shipbuilders and Unimech Aerospace and Manufacturing were up in the range to 1 per cent to 3 per cent.

 

At 01:49 PM; Nifty India Defence index was up 1.5 per cent as compared to 0.45 per cent rise in the Nifty 50.

 

Why are defence stocks in focus today?

 

The Ministry of Defence (MoD) will conduct its annual performance review of the 16 Defence Public Sector Undertakings (DPSUs) today, owing to “Year of Reforms” initiative. The review will focus on accelerating research and development (R&D), exports, and indigenisation across India’s defence manufacturing ecosystem. 

 

According to a Business Standard report, R&D spending by the country’s 16 DPSUs over the next five years is slated to increase with a projected expenditure of ₹32,766 crore, exceeding ₹30,952 crore invested in the past 10 years.

 

This comes amid a 15.4 per cent rise in the DPSUs’ combined turnover to ₹1.08 trillion, a 19.5 per cent increase in cumulative profit after tax to ₹20,021 crore, and a 51 per cent jump in exports in FY25 over FY24, according to the MoD.

 

DPSUs are expected to benefit from the heightened R&D focus and policy reforms. The seven newly corporatized Ordnance DPSUs are also set to play a major role, with a combined R&D investment of over ₹3,000 crore planned over the next five years, while defence shipyards have earmarked ₹1,300 crore for technology development.

 

ICICI Securities believe that increase in R&D expenditure by defence PSUs in the coming periods will be structurally positive for the sector as it will help India to build strategic autonomy, reduce foreign dependencies, and establish competitive advantages in global defence market. Increasing R&D spend will further accelerate the development of critical technologies including jet engines, advanced radars, missile seekers, electronic warfare systems, artificial intelligence systems, hypersonic weapons etc. 

 

Defence PSUs like Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics, Mazagon Dock Shipbuilders, Garden Reach Shipbuilders, Midhani, Cochin Shipyard are poised to benefit considerably from increasing R&D focus in the coming years, the brokerage firm said in a note.

 

Meanwhile, HAL has signed an agreement with General Electric Company (GE), for $1 billion (~₹ 8,870 crore), for the supply of 113 F404-GE-IN20 engines and a comprehensive support package for the execution of the 97 LCA Mk1A fighter aircraft programme, following the contract signing for the project in September 2025. Under the agreement, engine deliveries are scheduled between 2027 and 2032, ensuring timely execution of the LCA Mk1A production plan.

 

HAL maintains a robust order book, standing at approximately ₹1.9 trillion as on June 30, 2025 (compared to ₹94,000 crore as of March 31, 2024), which provides strong revenue visibility over the medium term and underscoring the company’s strong strategic and competitive position.

 

While competition from the private sector may intensify in the medium term, HAL mitigates this risk through its established track record, longstanding relationship with the Indian defence forces, expansive manufacturing capacity, skilled workforce, and commitment to research and development (R&D). HAL further benefits from the favourable government policies, particularly the Make in India and mandatory offset initiatives, which reinforce its role as a key driver of domestic defence production, according to the rating agency ICRA.