Why Defence Stocks Like Cochin Shipyard, GRSE, BEL and HAL Are Rallying?

Defence stocks witnessed strong momentum on Wednesday, with Cochin Shipyard, Garden Reach Shipbuilders & Engineers (GRSE), Bharat Electronics Ltd (BEL), Hindustan Aeronautics Ltd (HAL) and others climbing up to 7 per cent. The rally pushed the Nifty India Defence index higher by 1.86 per cent, reaching a two-month high. In September alone, the index has gained over 12 per cent, reflecting investor optimism toward defence and aerospace companies.

The surge came after reports that the Defence Ministry is reviewing a major proposal from the Indian Air Force (IAF) to acquire 114 “Made-in-India” Rafale fighter jets valued at over Rs 2 lakh crore. The deal, if cleared, would expand the IAF Rafale fleet from 36 to 176 aircraft, with over 60 per cent of components expected to be manufactured domestically in collaboration with Dassault Aviation and Indian aerospace firms. The proposal is likely to be reviewed by the Defence Procurement Board and later by the Defence Acquisition Council.

Defence companies are also supported by robust order books and fresh contracts. HAL holds orders worth Rs 1,89,300 crore and recently signed an SSLV technology transfer with ISRO. Mazagon Dock and Cochin Shipyard reported backlogs of Rs 32,000 crore and Rs 13,700 crore, respectively. Mishra Dhatu Nigam secured a Rs 136 crore order, increasing its order book to Rs 1,983 crore. BEL has bagged new orders worth Rs 712 crore this month, including contracts in IT infrastructure, cybersecurity, Electronic Support Measures, blockchain platforms and communications equipment.

Apollo Micro Systems gained 13 per cent in three days after its subsidiary signed an MoU with US-based Dynamic Engineering and Design. Investors are also closely watching the sector for opportunities in upcoming IPOs, bonus shares and possible dividend announcements, as defence companies continue to expand.

GRSE surged 7.26 per cent to Rs 2,617.40, with volumes of 3.90 million shares. Cochin Shipyard gained 4.11 per cent to Rs 1,896.40, testing a high of Rs 1,923.80 on 3.22 million shares. The stock has rallied more than 16 per cent in the past four sessions. Zen Technologies rose 3.66 per cent to Rs 1,524.40, with gains of over 18 per cent in the last six months.

The broader narrative highlights India’s continued focus on indigenisation under the Make in India and Aatmanirbhar Bharat programmes. With strong order flows, consistent Quarterly Results and the possibility of mega defence deals such as the Rafale project, defence companies across Small-Cap, Mid-Cap and Large-Cap segments are expected to remain in focus. These developments reinforce India’s growing role as a global defence manufacturing hub and may attract long-term investors looking for multibagger opportunities.

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