BDL, Mazagon Dock, BEL, GRSE, Paras Defence, HAL: Why defence stocks are rising today

Bharat Dynamics Ltd (BEL), Bharat Electronics Ltd (BEL), Hindustan Aeronautics Ltd (HAL), Cochin Shipyard Ltd, Mazagon Dock Shipbuilders Ltd and Paras Defence and Space Technologies Ltd were among defence stocks rallying up to 7 per cent in Friday's trade, as war in West Asia intensified and raised hopes defence spending may rise sharply across regions.  

BDL shares climbed 7.2 per cent to hit a high of Rs 1,375. BEL shares were up 2.88 per cent at Rs 473.25. HAL jumped 3.4 per cent to Rs 4,025. Among Shipping names, Mazagon Dock Shipbuilders Ltd was quoting 5.68 per cent at Rs 2,485.55. Cochin Shipyard Ltd was up 3.98 per cent to Rs 1,505.10.  Garden Reach Shipbuilders & Engineers Ltd (GRSE) advanced 6.05 per cent to Rs 2,553.30. 

Stocks gained as Iran’s Foreign Minister Abbas Araghchi reportedly told NBC his regime was 'confident' it could defeat a US ground invasion, hinting at further extention of war. 

"Global defence expenditure has entered a structurally high growth phase due to geopolitical conflicts and rapid military modernisation. Worldwide military spending reached $2.65 trillion in 2024, growing at about 8.6 per centCAGR in the past three years, significantly higher than historical averages. Countries are investing heavily in missile defence, drones, space systems, and electronic warfare technologies," HDFC Institutional Equities said today.

Paras Defence and Space Technologies Ltd added 4.72 per cent to Rs 750.95. Astra Microwave Products Ltd and ZEN Technologies Ltd gained 2 per cent each.

"We maintain our structurally positive outlook for the Indian defence sector, underpinned by sustained government policy support, rising capital allocation and multi-year visibility on orders. MoD is targeting a capital outlay of Rs 3 lakh crore by 2029, implying a double-digit CAGR," ICICI Securities said.

The domestic brokerage said the recent Israel-US-Iran war has emphasized need for military spends on security.  It expects GCC countries augmenting defence budgets sharply, providing additional revenue streams to Indian players via exports. 

"We believe, major impetus would be observed in aerospace, electronics and warfare, and naval, with companies exposed to these segments potentially performing relatively better. We continue to like HAL in PSU space (BEL was our previous top pick but it has already rallied) and Solar Industries and PTC Industries in private space," it said.