Bulls Target Defence: Bharat Dynamics, HAL, Cochin Shipyard Gain Up to 12%

The bullish momentum in defence stocks showed no signs of slowing on May 14, as the sector extended its rally for the third consecutive session this week. Investor enthusiasm remained high following Prime Minister Narendra Modi’s national address on ‘Operation Sindoor’.

The Prime Minister’s strong endorsement of indigenous defence manufacturing sparked renewed hopes of swelling order books for key players in the sector. His push for 'Make In India' for military equipment added to the optimism already surrounding defence counters.

“We have proven our dominance in new-age warfare,” PM Modi said on Monday evening. “From defeating Pakistan on the battlefield to now showcasing our strength in modern warfare, India has led from the front. The time has come for ‘Made in India’ defence solutions. We’ve adopted a zero-tolerance policy against terrorism.”

The address not only struck a patriotic chord but also reinforced confidence in the government’s commitment to boosting local defence production, something the markets quickly picked up on.

At 10.49 am, shares of Hindustan Aeronautics Ltd (HAL) and Bharat Dynamics were trading nearly 3% higher while those of Cochin Shipyard led with over 12% gains. Paras Defence and Space Technologies followed suit and soared nearly 8% while Mazagon Dock climbed 6%.

What analysts say?

Analysts continue to maintain a bullish take on defence stocks owing to a strong order pipeline. "We continue to be positive on the Indian defence shipyards sector given strong order outlook, a robust policy framework favoring indigenization, and substantial government investment," Antique Broking stated in a report.

The Defence Acquisition Council (DAC) has approved orders worth Rs 8.45 trillion over FY22–25, which is almost 3.3x the same number for the preceding three years, as per the brokerage firm. "We expect this to translate into significant order inflows in FY26–27 for defence shipyards."

Meanwhile, India's defence manufacturing experienced a triple-digit jump and stood at Rs 1.27 lakh crore in FY24 compared to a decade ago. In the last 6 months, the Nifty India defence index has surged over 23% as against the Nifty50, which has soared over just 5.25%. Analysts also pointed out that the overall procurement pipeline for defence warships is often subject to 'multi-year' delays.

"Nevertheless, based on industry interactions, we have a fair degree of confidence and visibility on key big-ticket orders worth Rs 2,120 billion that are likely to be placed during FY26–27," the brokerage firm said.