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Stocks like Hindustan Aeronautics, Bharat Dynamics, Bharat Electronics, Paras Defence and Space Technologies, Mazagon Dock Shipbuilders, Cochin Shipyard, Data Patterns (India), and Garden Reach Shipbuilders were trading higher in the range of 3% to 7%.
India’s defence sector has high expectations from Union Finance Minister Nirmala Sitharaman’s upcoming Union Budget 2025 on February 1.
Experts are of the view that the upcoming budget holds the potential to shape India’s defence landscape by prioritising modernisation, self-reliance, and technological advancements. A well-structured capital outlay, enhanced R&D investments, and strategic policy incentives will not only boost national security but also drive India’s emergence as a key player in the global defence market.
Until November 2024, Defence, railways and road transport accounted for about 75% of the capital expenditure, whereas significant year-on-year growth occurred in power, food and public distribution.India’s defence budget has historically averaged about 2.5% of the gross domestic product for more than a decade now, with a steady rise in capital expenditure. The July 2024 Union Budget allocated ₹1.72 lakh crore for capital acquisition by the Defence Ministry. In all, the budget set aside ₹6.22 lakh crore for the ministry.
Over the last five years, capital budget allocations have grown at an average annual rate of 11%, and for FY2025-26, it is projected to reach approximately ₹1,90,920 crore. Continuing the emphasis on self-reliance, it is expected that 75% of this budget or around ₹1,43,000 crore will be allocated to domestic procurements.
Brokerage firm Elara Securities expects the Defence budget to rise by 7-8%, reaching ₹1.9 lakh crore. Most of the defence capex may be towards higher allocation for aircraft and engines, naval fleet and other equipment. More schemes to boost defence budget will be beneficial for companies like Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics and Solar Industries.
Any changes in schemes are expected to attract more startups, tech advancements etc. that will keep stocks like IdeaForge and Zen Tech in focus. A higher allocation to support indigenisation and defence production will benefit all the companies in the sector.
Shares of Paras Defence are trading up to 7% higher at ₹1,127.70, while those of Bharat Electronics are holding on to gains of 5% at ₹292.95. Others like Hindustan Aeronautics, Bharat Dynamics are trading 4% higher today.
