Paras Defence, Garden Reach Lead Defence Stocks Rally That Added Rs 34,000 Crore To Investors' Wealth

Defence stocks added over Rs 34,000 crore to the market cap in early trade on Tuesday. Most shares in the segment continued their rally following the government's pledge to increase sectoral exports.

The market cap of defence stocks rose Rs 34,373.92 crore to Rs 11.59 lakh crore as of 1:52 p.m.

Defence Minister Rajnath Singh has said that the government intends to increase defence exports to Rs 50,000 crore by 2028–29 and to modernise the manufacturing sector as well. This will create big business opportunities for the domestic manufacturer.

The work, which has started under the leadership of the defence minister, and the way defence PSU companies have organised have impacted defence manufacturing, according to SK Jha, chairperson of Mishra Dhatu Nigam Ltd.

Unless domestic manufacturing grows, exports cannot grow. The minister has also emphasised on enhancement of domestic defence manufacturing, Jha said in an interview to NDTV Profit.

Defence exports have gone up exponentially. This year, exports have crossed Rs 21,000 crore, which is a 25% growth compared to the previous year, Jha said.

This growth is coming mainly from equipment exports. Those things are also in the pipeline. India is also looking to export missiles, aircrafts. These kinds of deals will increase further, according to Jha.

Paras Defence & Space Technologies Ltd. was locked in upper circuit of 20% after 3.29 lakh shares change hands in three large trades during early trade, as per Bloomberg data. Garden Reach Shipbuilders Engineers Ltd. and IdeaForge Technology Ltd. were next in the list of leading defence stocks with 11.12% and 9.41% rise, respectively.

Cochin Shipyard Ltd., Zen Technologies Ltd., and Mazagon Dock Shipbuilders Ltd. also rose to their highest level since listing on the bourses.

However, Bharat Forge Ltd. and PTC Industries Ltd. declined up to 4% to emerge as the top loser among peers.

Defence stocks have been on the boil over the past week. Garden Reach Shipbuilders, Mazagon Dock and Paras Defence have gained 27–51% during the past five trading sessions.

Other key defence players, like Bharat Dynamics Ltd., Hindustan Aeronautics Ltd., Cochin Shipyards Ltd., Bharat Electronics Ltd., and BEML Ltd., have surged 11–19% in the same period.

Defence received the highest allocation in the 2024 Interim Budget as Finance Minister Nirmala Sitharaman continued to focus on infrastructure, local manufacturing, and fiscal consolidation.

The outlay for the Defence Ministry is budgeted at Rs 6.2 lakh crore for fiscal ending March 2025, compared with Rs 5.94 lakh crore in the previous fiscal, according to budget documents.

Over fiscal years 2022–25, defence budget as a percentage of union government expenditure has remained in the 13% range.