Hindustan Aeronoutics, Paras Defence Astra Micro, Cochin Shipyard surge over 1%: Here is Why?

On Monday, defence stocks rallied sharply after reports indicated that the Defence Ministry is reviewing a major proposal to acquire 114 Rafale fighter jets under a ‘Made in India’ model. According to ANI, the Rs 2 lakh crore-plus project would involve French manufacturer Dassault Aviation partnering with domestic aerospace firms, ensuring that more than 60 per cent of components are manufactured in India. The Indian Air Force has already submitted its Statement of Case, which is undergoing scrutiny at multiple levels before being forwarded to the Defence Procurement Board and the Defence Acquisition Council.

If cleared, the project would significantly expand the Rafale fleet, adding to the IAF’s 36 existing aircraft and the Navy’s 26 on order, eventually taking the total number of Rafales in Indian service to 176.

Defence Minister Rajnath Singh has approved the Defence Procurement Manual (DPM) 2025, aimed at streamlining, simplifying, and rationalising the revenue procurement process for the Ministry of Defence. The new manual is expected to meet the evolving needs of the Armed Forces in modern warfare while enhancing self-reliance under the Revenue Head (Operations & Sustenance Segment).

The DPM 2025 is structured to promote jointness among the three services and ensure faster decision-making to maintain the highest level of preparedness. With revenue procurements valued at nearly Rs 1 lakh crore in the current financial year, the manual introduces a new provision for an assured guarantee of orders in terms of quantity for up to five years, with a possible extension of another five years in special cases. This move is in line with India’s broader defence push, which has also seen IPOs, bonus issues, and dividend announcements in several Small-Cap and Large-Cap defence stocks in recent quarters.

Following these developments, the Nifty India Defence Index gained 1.45 per cent to hit an intraday high of 8,161.70 before settling 0.59 per cent higher. Among gainers, Astra Microwave Products rose 2.63 per cent, followed by Cochin Shipyard (2.51 per cent), Paras Defence (2.28 per cent), Cyient DLM (1.98 per cent), DCX Systems (1.8 per cent) and Mishra Dhatu Nigam (1.52 per cent). Large-cap player Hindustan Aeronautics and small-cap Zen Technologies also advanced 1.4 per cent each, while Bharat Dynamics, Dynamatic Technologies, Mazagon Dock and Data Patterns posted smaller gains.

On the other hand, Garden Reach Shipbuilders & Engineers declined 1.94 per cent, while Mtar Technologies, BEML, Solar Industries, and Unimech Aerospace and Manufacturing ended marginally lower.

With procurement reforms and large-scale projects like the Rafale expansion in the pipeline, the defence sector continues to attract investor attention, especially in the context of long-term multibagger potential in select Mid-Cap and small-cap counters.

Disclaimer: The article is for informational purposes only and not investment advice.