In the wake of India's strong push to boost India's defence sector, the industry shares seem to be on a roll. Shares of six defence companies hit their 52-week high today as the government sets ambitious export goals for the country's thriving defence industry in its third term at the Centre.
Shares of aerospace and defence company Paras Defence and Space Technologies Ltd hit 20% upper circuit on the second session straight following reports of a stake buy by the Abu Dhabi Investment Authority (ADIA). ADIA reportedly bought a 1.43% stake in the company via a bulk deal on June 14, 2024, after it purchased around 5.6 lakh shares at ₹1,120.71 apiece.
With today's rise, the share price of Paras Defence has seen a surge for the fifth straight session after a 20% rise on Friday and a 7% uptick on Thursday. The strong rally in Paras shares has led to a 54.42% increase in its share price in the past week alone.
The share opened a gap up at ₹1,226 and hit an intra-day high of ₹1,388.70 today, which is also its 52-week high. The company shares saw strong action as 8.32 lakh units changed hands at the counter against the two-week average of 2.60 lakh. At the current share price of ₹1,388.70, Paras Defence m-cap stands at ₹5,415.94 crore.
The share price of Paras Defence has more than doubled in the past year, increasing from ₹614.9 on June 19, 2023, to ₹1,388.25 today. In this calendar year, shares of Paras Defence have seen an 83.67% rise and its six-month return stands at 85.62%. In the past month, the scrip has risen 77.31%.
Shares of another aerospace & defence PSU HAL also closed up 6.42% today after hitting a 52-week high of ₹5,565.35 on the BSE. At the current share price, HAL's m-cap has surged to ₹3.7 lakh crore.
Shares of shipbuilding and allied services company Mazagon Dock Shipbuilders Ltd hit a 52-week high at ₹4219.00 on Tuesday, taking its m-cap to ₹84,182.38 on the BSE.
Cochin Shipyard Ltd, another shipbuilding & allied services company, saw its shares surge 10% upper circuit to hit a 52-week high at ₹2,333.90 on the BSE. The company's m-cap at the current share price stands at ₹61,226.79 crore.
Aerospace & defence major Garden Reach Shipbuilders & Engineers Ltd was another company, which saw its shares hit a 52-week high at ₹1,888.20 on the BSE, taking its m-cap to ₹21,188.68 crore.
Shares of aerospace & defence company Zen Technologies Ltd also hit a one-year high. The stock opened at ₹1,139.00 today and hit its 52-week high of ₹1,229.60 on the BSE, taking the company's m-cap to ₹10,279.87 crore.
Shares of other defence companies also saw a rally, with Data Patterns (India) Ltd jumping 5.34%, Bharat Dynamics Ltd suring 2.83%, and MTAR Technologies Ltd surging 2.79%, respectively.
India's defence sector is witnessing significant growth driven by increasing defence budgets, modernisation efforts, and the government's emphasis on indigenous manufacturing through initiatives like "Make in India." The new Modi government aims to export around ₹50,000 crore worth of defence equipment in the next five years.
"India's strategic location in the geopolitically significant South Asian region makes defence a priority area for national security as it continues to strengthen its defence capabilities to address regional security challenges," Nomura Global Market Research said in its last month report.
Notably, the government has been actively supporting the defence sector through favourable policy reforms, incentives, and initiatives to promote indigenous manufacturing and technology development. Nomura says it expects the share of "defence capital outlay to increase to 37% of the total defence budget in FY30F (FY24RE: 26%)". The Nomura brokerage has initiated coverage on the sector, with 'Buy' ratings on Hindustan Aeronautics (28% potential upside), and Bharat Electronics (32% potential upside).
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