 "Defence Research and Development Organisation (DRDO) conducts a successful flight test of the New Generation AKASH air defence missile from the Integrated Test Range, Chandipur, off the coast of Odisha on January 12, 2024. Image credit: PIB")
Shares of Indian defence companies rallied in trade on Wednesday with Garden Reach Shipbuilders & Engineers shares rising up to 20 per cent after Germany passed a landmark spending package.
Garden Reach shares surged as much as 20 per cent to Rs 1,641 per share while shares of Mazagon Dock Shipbuilders and Cochin Shipyard surged 10 per cent during the day. Paras Defence & Space Technologies rose 6.5 per cent to Rs 963.3 per share while Hindustan Aeronautics went up 5.3 per cent to Rs 3,772.4 per share
Shares of IdeaForge Technologies soared 17.7 per cent to Rs 396 per share on Wednesday while Bharat Dynamics surged 8.5 per cent during the session. All the 16 stocks in the Nifty India Defence Index were trading higher with Garden Reach and IdeaForge leading the pack. The index was up 2.15 per cent in trade today, compared to the 0.31 per cent advance in the benchmark Nifty50 index as of 2:00 PM.
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In a major step toward unlocking hundreds of billions of euros in debt financing for defence and infrastructure, Germany's bill cleared the two-thirds threshold required for changes to the country’s constitutional borrowing rules. Defence spending, which is in excess of 1 per cent of gross domestic product — roughly 45 billion euros — will be released from constitutional borrowing restrictions, according to a Bloomberg report.
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Indian defence pack earlier this month got a boost when European Union (EU) announced a rearmament plan for the EU of 800 billion euros (~$850 billion) including support of Ukraine after the US suspended military aid to that country. Post which, Elara Capital said that defence companies in India will benefit as the EU defence original equipment manufacturers (OEM) turn to public and private defence firms to procure components and subsystems.
India's defence exports have increased significantly in recent years, reaching a record Rs 21,000 crore in FY24 (Source: Defence Ministry). This is a 33 per cent increase from the previous fiscal year. India has set a defence exports target of Rs 30,000 crore by FY26.
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.
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