Rally in defence equipment makers' stocks not in sync with earnings growth

According to Chokkalingam, the rally is an opportunity for investors to book profits in these stocks rather than make fresh investments

There has been a sharp rise in the share price of listed defence equipment makers since the start of the current calendar year. However, the rally has yet to reflect in the financial performance of these companies.

The combined market capitalisation (m-cap) of six public-sector defence companies is up 45 per cent year-to-date (YTD) and has more than doubled in the past year. In contrast, the combined earnings was up only 15.8 per cent in 2022-23 (FY23).

The six defence stocks in the Business Standard sample ended Tuesday with an m-cap of Rs 2.93 trillion, up 44 per cent from about Rs