From Budget boost to market boom: How defence stocks soared up to 630% in the last three years
Defence Budget rose from Rs 5.73 lakh crore in FY23 to an estimated Rs 7.85 lakh crore in FY27. Capital outlay on defence services also picked up, increasing from Rs 1.43 lakh crore to Rs 2.19 lakh crore during the period, helping Indian defence stocks
- Feb 1, 2026,
- Updated Feb 1, 2026 5:02 PM IST
Government spending on defence has increased steadily over the last several years, reflecting India’s focus on military preparedness and indigenisation. The defence budget rose from Rs 5.73 lakh crore in FY23 to a budgeted estimate of Rs 7.85 lakh crore in FY27, as per CMIE Economic Outlook data.
Capital outlay on defence services also picked up, increasing from Rs 1.43 lakh crore to Rs 2.19 lakh crore during the period, pointing to higher spending on equipment, platforms, and modernisation. As a result, defence’s share in the total Union Budget has inched up from 13.7% in FY23 to 14.7% in FY27 (Budget Estimates).
Reacting to the Union Budget 2026-27, Varun Gupta, CEO, Groww Mutual Fund said, “The higher allocation to defence underscores the government’s twin priorities of strategic preparedness and domestic capability-building. Beyond immediate security needs, capital-led defence spending has a powerful economic multiplier—supporting indigenous manufacturing, technology development and skilled employment. A sustained shift towards domestically sourced defence capital can strengthen India’s strategic autonomy while creating durable growth opportunities across the broader industrial ecosystem.”
Make in India helping domestic defence companies
This increase in defence budget and government’s focus on Make in India has also reflected on the strong financial performance of the Indian defence companies. The 16 defence stocks in the Nifty India Defence Index have seen strong growth in both sales and profits over the last three years. Gross sales rose from Rs 76,105 crore in FY22 to Rs 1.12 lakh crore in FY25, showing steady expansion in defence manufacturing and order execution. Profit after tax grew even faster, almost doubling from Rs 11,343 crore to Rs 21,270 crore during the same period.
Stock market performance of defence stocks in last 3 years
India’s defence and allied manufacturing stocks have delivered exceptional returns over the last three years, turning into some of the biggest wealth creators in the market. Data sourced from ACE Equity shows that several defence, shipbuilding, and engineering companies have seen sharp gains in both share prices and market capitalisation between February 2023 and January 2026.
Zen Technologies has emerged as the top performer in the three years period, delivering a staggering 631% return over three years. Its market capitalisation rose more than eight times, from Rs 1,540 crore in February 1, 2023 to Rs 12,777 crore by January 30, 2026. The rally reflects growing demand for defence training and simulation solutions, alongside rising defence spending.
Among shipbuilders, Mazagon Dock Shipbuilders, Cochin Shipyard, and Garden Reach Shipbuilders have all delivered returns of over 475%. Mazagon Dock’s market cap surged from Rs 15,002 crore to over Rs 1.03 lakh crore in three years, highlighting strong execution, export orders, and sustained government support for naval manufacturing.
PSU defence giants grow larger
Public sector defence majors have not only delivered strong returns but have also grown into market heavyweights. Bharat Electronics posted a 394% return over three years, with its market capitalisation jumping from Rs 66,446 crore to over Rs 3.28 lakh crore. Hindustan Aeronautics followed with a 291% return, as its market value crossed Rs 3.08 lakh crore, supported by aircraft deliveries and long-term defence contracts.
Bharat Dynamics, a key missile manufacturer, delivered a 238% return during the period, while Mishra Dhatu Nigam, a specialised alloy producer, posted a more modest but steady 84% gain.
Private defence players shine
Several private-sector defence companies also recorded strong growth. Astra Microwave Products and Dynamatic Technologies both delivered returns of 272%, while Paras Defence and Space Technologies gained 170%. Data Patterns, which supplies electronic systems to defence and aerospace programmes, nearly doubled investor wealth with a 96% return.
These companies benefited from rising indigenisation, higher order inflows, and a clear policy push to reduce defence imports.
Solar Industries India delivered a solid 242% return, with its market capitalisation rising to nearly Rs 1.22 lakh crore. BEML, a PSU in construction and mining equipment, gained 157%, while MTAR Technologies rose 74% over three years.
Bharat Forge, one of India’s largest forging companies, delivered a relatively lower but stable 66% return, reflecting its mature scale and diversified global presence.
Government spending on defence has increased steadily over the last several years, reflecting India’s focus on military preparedness and indigenisation. The defence budget rose from Rs 5.73 lakh crore in FY23 to a budgeted estimate of Rs 7.85 lakh crore in FY27, as per CMIE Economic Outlook data.
Capital outlay on defence services also picked up, increasing from Rs 1.43 lakh crore to Rs 2.19 lakh crore during the period, pointing to higher spending on equipment, platforms, and modernisation. As a result, defence’s share in the total Union Budget has inched up from 13.7% in FY23 to 14.7% in FY27 (Budget Estimates).
Reacting to the Union Budget 2026-27, Varun Gupta, CEO, Groww Mutual Fund said, “The higher allocation to defence underscores the government’s twin priorities of strategic preparedness and domestic capability-building. Beyond immediate security needs, capital-led defence spending has a powerful economic multiplier—supporting indigenous manufacturing, technology development and skilled employment. A sustained shift towards domestically sourced defence capital can strengthen India’s strategic autonomy while creating durable growth opportunities across the broader industrial ecosystem.”
Make in India helping domestic defence companies
This increase in defence budget and government’s focus on Make in India has also reflected on the strong financial performance of the Indian defence companies. The 16 defence stocks in the Nifty India Defence Index have seen strong growth in both sales and profits over the last three years. Gross sales rose from Rs 76,105 crore in FY22 to Rs 1.12 lakh crore in FY25, showing steady expansion in defence manufacturing and order execution. Profit after tax grew even faster, almost doubling from Rs 11,343 crore to Rs 21,270 crore during the same period.
Stock market performance of defence stocks in last 3 years
India’s defence and allied manufacturing stocks have delivered exceptional returns over the last three years, turning into some of the biggest wealth creators in the market. Data sourced from ACE Equity shows that several defence, shipbuilding, and engineering companies have seen sharp gains in both share prices and market capitalisation between February 2023 and January 2026.
Zen Technologies has emerged as the top performer in the three years period, delivering a staggering 631% return over three years. Its market capitalisation rose more than eight times, from Rs 1,540 crore in February 1, 2023 to Rs 12,777 crore by January 30, 2026. The rally reflects growing demand for defence training and simulation solutions, alongside rising defence spending.
Among shipbuilders, Mazagon Dock Shipbuilders, Cochin Shipyard, and Garden Reach Shipbuilders have all delivered returns of over 475%. Mazagon Dock’s market cap surged from Rs 15,002 crore to over Rs 1.03 lakh crore in three years, highlighting strong execution, export orders, and sustained government support for naval manufacturing.
PSU defence giants grow larger
Public sector defence majors have not only delivered strong returns but have also grown into market heavyweights. Bharat Electronics posted a 394% return over three years, with its market capitalisation jumping from Rs 66,446 crore to over Rs 3.28 lakh crore. Hindustan Aeronautics followed with a 291% return, as its market value crossed Rs 3.08 lakh crore, supported by aircraft deliveries and long-term defence contracts.
Bharat Dynamics, a key missile manufacturer, delivered a 238% return during the period, while Mishra Dhatu Nigam, a specialised alloy producer, posted a more modest but steady 84% gain.
Private defence players shine
Several private-sector defence companies also recorded strong growth. Astra Microwave Products and Dynamatic Technologies both delivered returns of 272%, while Paras Defence and Space Technologies gained 170%. Data Patterns, which supplies electronic systems to defence and aerospace programmes, nearly doubled investor wealth with a 96% return.
These companies benefited from rising indigenisation, higher order inflows, and a clear policy push to reduce defence imports.
Solar Industries India delivered a solid 242% return, with its market capitalisation rising to nearly Rs 1.22 lakh crore. BEML, a PSU in construction and mining equipment, gained 157%, while MTAR Technologies rose 74% over three years.
Bharat Forge, one of India’s largest forging companies, delivered a relatively lower but stable 66% return, reflecting its mature scale and diversified global presence.