Last Updated on Jan 18, 2024 by Harshit Singh
The defence industry plays a pivotal role in safeguarding nations through the production, engineering, and maintenance of military equipment, facilities, and materials. India’s strategic importance in this sector is underscored by its efforts to reduce reliance on foreign defence imports, promoting self-reliance and indigenous production. As a result, many defence sector companies have benefitted from this “Atmanirbhar Bharat” proposition. In this article, we will be exploring the potential future of the defence industry in India and shed light on the best defence stocks in India.
Table of Contents
Best defence stocks in India (2024)
| Stock Name | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 1Y Return (%) | 5Y CAGR (%) | Net Income (Q) |
| Taneja Aerospace and Aviation Ltd | 936.15 | 375.50 | 85.26 | 229.24 | 65.55 | 2.68 |
| Hindustan Aeronautics Ltd | 1,97,843.71 | 2,958.30 | 33.95 | 140.75 | 50.02 | 1236.7 |
| Sika Interplant Systems Ltd | 666.09 | 1,570.90 | 75.01 | 122.13 | 59.96 | 5.04 |
| Bharat Dynamics Ltd | 32,095.30 | 1,751.15 | 91.13 | 86.85 | 43.12 | 147.11 |
| High Energy Batteries (India) Ltd | 537.92 | 600.10 | 26.27 | 81.03 | 59.88 | 3.26 |
| Data Patterns (India) Ltd | 11,063.27 | 1,976.15 | 89.22 | 57.66 | – | 33.79 |
| Paras Defence and Space Technologies Ltd | 2,932.41 | 751.90 | 81.32 | 32.53 | – | 9.42 |
| ideaForge Technology Ltd | 3,337.45 | 778.40 | 104.33 | -39.89 | – | 0.9 |
Note: The data is as of 18th January 2024. The list of best defence stocks in India is derived from using Tickertape Stock Screener. The parameters used are as follows:
- Sector: Industrials > Aerospace and Defence Equipment
- 1Y Returns: Sorted from high to low
- 5Y CAGR
- Net Income (Q)
Overview of best defence stocks in India
1. Taneja Aerospace and Aviation Ltd
This small-cap defence company, Taneja Aerospace and Aviation, is involved in the manufacturing and sale of various parts and components to the aviation industry, providing services related to airfield and maintenance, repair and operations (MRO) and allied services. The company was established in 1988.
Among other small cap defence stocks in India, this defence stock recorded 229.24% growth in the past year and is ranking highly on Profitability with a score of 8.7/10.
2. Hindustan Aeronautics Ltd (HAL)
HAL is a defence and aerospace company established on 23rd December 1940 in Bangalore, Karnataka, in association with the then Government of Mysore. In March 1941, the Government of India became one of the shareholders in the company and subsequently took over its management in 1942.
This decades old large-cap defence company has the largest market share of 88.48% in the sector. Moreover, this defence sector stock has witnessed a growth of 140.75% in the past year and is currently trading closer to its 52-week high.
3. Sika Interplant Systems Ltd
Founded in 1969, Sika Interplant Systems is a small-cap defence company involved in engineering products, projects and designs. The company’s products are used for Aerospace, Space, Marine and Land applications.
Over the last 5 yrs, the revenue of Sika Interplant Systems has grown at a yearly rate of 22.19%, vs an industry average of 5.68%.
4. Bharat Dynamics Ltd
This small-cap company, BDL, designs and manufactures underwater guided weapon systems. It was established on 16th July 1970. This small-cap defence stock is showcasing good signs of profitability on the Tickertape Scorecard and has been able to generate double-digit returns in the past year.
5. High Energy Batteries (India) Ltd
High Energy Batteries was established in 1979 and manufactures Hi-Tech batteries used in the army, airforce, navy, and Satellite Launch Vehicles. The company also exports their products to various countries globally.
This small-cal defence stock has witnessed a growth of 81.03% in a year.
6. Data Patterns (India) Ltd
This small-cap company, Data Patterns, was established on 11th November 1998 as Indus Teqsite Private Limited. The company is a vertically integrated Defence and Aerospace electronics solutions provider catering to the indigenously developed defence products industry.
Over the last 5 yrs, the revenue growth of the stock has averaged 52.08%, vs the industry average of 5.68%.
7. Paras Defence and Space Technologies Ltd
This small-cap company, Paras Defence and Space Technologies, was founded on 16th June 2009. The company is into developing systems for defence and space applications. It operates under five segments – Defense and Space Optics, Defense Electronics, Heavy Engineering, Electromagnetic Pulse Protection Solutions and Niche Technologies.
This small-cap stock is showing good signs of profitability on the Tickertape Scorecard and has grown 32.53% in one year.
8. ideaForge Technology Ltd
Ideaforge Technology Private Ltd is engaged in the business of manufacturing and marketing of unmanned aerial vehicle (UAV) systems, which are used for security and surveillance.
This small-cap defence stock has grown in leaps since its IPO. Ideaforge Technology Private Ltd has a profitability score of 6.5 out of 10, showing good signs of profitability & efficiency.
Future of the defence industry in India
As of 2020, India is one of the top 5 largest defence spenders globally. However, after the rise of programs like ‘Atmanirbhar Bharat’ and ‘Make in India’, India started focussing on Indian companies and reduced foreign defence imports. The country also wants to strengthen their defence manufacturing industry through these initiatives and develop its independence. Not just that, given the national security concerns, India had to make such a decision.
In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman has increased India’s defence budget to Rs. 5.94 lakh cr., which is 13% up from FY 2022-23’s budget of Rs. 5.25 lakh cr. Some of the allocated budget, i.e., Rs. 1.62 lakh cr. will be used towards capex (capital expenditure), which includes purchasing new warships, aircraft, weapons and other equipment.
By 2025, the Indian Government is looking to achieve a turnover of $25 bn in the Aerospace and Defence goods and service sector. This target turnover includes export revenue of $5 bn as well.
Factors to consider before investing in defence stocks in India
Though India is focussing highly on the defence sector, there are certain things to consider while investing in their stocks.
- Volatile: Defence stocks can go up whenever there is economic uncertainty and can go down at times of peace. So they are highly volatile. They are cyclical stocks.
- Backed by the government – Being backed by the government and involving national security reasons, these stocks can be evergreen.
However, the above factors are about the industry. Along with the industry’s performance, you must analyse individual stocks and their growth. Use Tickertape’s Scorecard to analyse a company’s performance, growth, profitability and other key indicators.
The Scorecard gives a score to each and every indicator making it easy for you to evaluate a stock before investing. Go to individual asset pages on Tickertape and explore the feature now.
Conclusion
Overall, these are the defence stocks in India and the industry growth. It is important to note that the defence industry is huge, comprising the navy, army and air force. Though it is an important sector that can be in demand forever, the stock’s performance is entirely different, as mentioned earlier. Therefore, analyse and invest after considering your investment objectives and risk appetite.
FAQs
What are the best defence stocks in India?
Several companies are in the defence sector. Visit Tickertape and follow the steps below to find the best defence stocks in India.
– Launch the Stock Screener
– Select ‘Aerospace and Defence Equipments’ under ‘Sector’
Now sort the stock according to your preferred parameters like market cap, 5-yr CAGR, net profit, return on equity, etc.
What is the list of defence stocks on the NSE?
There are several defence sector companies listed on the NSE. Use Tickertape to get the list of defence stocks on NSE.
– Launch Tickertape Stock Screener
– Select ‘Aerospace and Defence Equipments’ under ‘Sector’
You can sort these stocks according to your preferred parameters like market cap, 5-yr CAGR, net profit, return on equity, etc.
Which is the top-performing defence sector stock in India?
On the basis of 1Y return performance, Hindustan Aeronautics Ltd has been the best-performing defence stock in India in the past year.
How can I identify the top defence stocks in India?
To identify the best defence stocks, analyse financial reports, monitor government contracts, and stay updated on political developments influencing the defence sector.
What risks are associated with investing in defence stocks?
Investing in defence stocks carries risks such as budget constraints, regulatory changes, and geopolitical tensions affecting defence budgets. Mitigate these risks through thorough research and diversification.
Do defence shares typically offer dividends?
Dividend payouts are not limited to specific sectors, including defence. This depends on the company’s financial performance. With many defence companies have recorded net profit in the past, it is quite possible for defence companies to announce dividends. It is advisable to check the dividend history of specific defence shares before investing.
Are defence sector stocks can be considered as a long-term investment in India?
With increased allocation of budget and government’s mission to produce defence equipment in India, the defence sector stocks have received major boost. As a result, many defence sector stocks have made a double-digit return in the past year.
- Best Defence Stocks in India (2024) - Jan 18, 2024
- Emerging trends in Exchange Rate Markets - Oct 19, 2023
