Today’s blog delves into India’s top 5 defence stocks, spotlighting companies that significantly contribute to the nation’s defence capabilities. The defense sector is crucial for enhancing India's security and fostering self-sufficiency in defence manufacturing. As home to the world's second-largest standing army, India faces a challenging geopolitical landscape, necessitating robust defence measures.

Defense Minister’s Vision

This analysis aligns with the recent statement by Defence Minister Shri Rajnath Singh, emphasising enhanced security, self-sufficiency in the defence sector, and the well-being of military personnel, both active and retired.

India’s Defence Expenditure

For FY 2024-25, India's defence budget stands at Rs 6.21 lakh crore, accounting for 13.04% of the Union Budget. The allocation includes:

• Capital acquisition: Rs 1.72 lakh crore (27.67%)

• Revenue expenditure (excluding salaries): Rs 92,088 crore

• Pension: Rs 1.41 lakh crore

• Border infrastructure: Rs 6,500 crore

These figures underscore India’s commitment to strengthening its defense capabilities.

Top 5 Defence Stocks in India

1. Hindustan Aeronautics Ltd (HAL)

• Overview: Established in 1940, HAL leads the defense and aerospace sector with an 88.48% market share.

• Financials: 5-year CAGR: 21.31%, P/E ratio: 54.46, ROE: 26.15%

• Ownership: Promoters: 71.64%, Foreign Institutions: 12.42%, Retail Investors: 6.37%

• Recent Performance: Stock rose by 0.64%

2. Bharat Dynamics Limited (BDL)

• Overview: Founded in 1970, BDL specialises in underwater guided missile systems.

• Financials: 5-year CAGR: 16.69%, P/E ratio: 56.93, ROE: 16.85%

• Ownership: Promoters: 74.93%, Mutual Funds: 7.93%, Retail and Others: 9.72%

• Recent Performance: Shares fell by 10%, reaching a low of Rs 1,293.35 on June 5, 2024

3. Data Patterns (India) Limited

• Overview: Established in 1998, this company provides defence and aerospace electronics solutions.

• Financials: 5-year CAGR: 15.37%, P/E ratio: 56.93

• Ownership: Promoters: 42.41%, Foreign Institutions: 14.57%, Mutual Funds: 9.34%, Indian Public: 25.38%

4. Bharat Electronics Limited (BEL)

• Overview: A Navratna PSU established in 1954, BEL specialises in aerospace and defence electronics.

• Financials: P/E ratio: 53.31, ROE: 23.52%

• Ownership: Promoters: 51.14%, Foreign Institutions: 17.56%, Mutual Funds: 18.06%, Retail and Others: 8.66%

• Recent Performance: Stock rose by 0.64%

5. Mazagon Dock Shipbuilders Limited (MDL)

• Overview: Founded in 1934, MDL is a leading shipbuilding firm in India.

• Financials: P/E ratio: 35.3, ROE: 28.61%

• Ownership: Promoters: 84.83%, Mutual Funds: 0.48%, Foreign Institutions: 2.38%, Retail and Others: 12.12%

• Recent Performance: Stock increased by 4.3%

Conclusion

India’s defence sector achieved record shipments of Rs 21,083 crore in FY 2023-2024, with an ambitious target of Rs 50,000 crore by 2028-2029, showcasing the government's dedication to making India a global defence leader. As demand for indigenous defence products grows, investing in defence stocks may present lucrative opportunities.