Defence stocks: Paras Defence, Data Patterns, HAL, BEL, BDL gain up to 7%; here's why

Defence stocks: Shares of Paras Defence and Space Technologies Ltd, Data Patterns (India) Ltd, Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Bharat Dynamics Ltd (BDL), among others, on Tuesday continued recently rally amid hopes the government's defense sector spending may keep growing at healthy pace going ahead.

Paras Defence jumped 7.46 per cent to Rs 1,227.65, ahead of the company's board meet to consider stock split and dividend on April 30. Data Patterns (India) Ltd surged 5.55 per cent to Rs 2,358.05. BEL jumped 3.95 per cent to Rs 317.25. BDL was up 2.63 per cent at Rs 1,527. HAL shares rose 2 per cent to Rs 4,517.  

Among shipping stocks, Garden Reach Shipbuilders & Engineers Ltd (GRSE) soared 4.63 per cent to Rs 2,358.05. Mazagon Dock Shipbuilders advanced 3.69 per cent to Rs 2890. Cochin Shipyard added 2.07 per cent to Rs 1,533.45.  

In view of the changing global geopolitical landscape, many countries have started increasing their defense spending as a percentage of GDP, aiming for levels between 3-5 per cent. 

European nations like Germany, Spain, and even Japan are making significant upward adjustments. 

Captain Vishal Kanwar, Managing Director at PwC Advisory India, hosted by MOFSL in an expert session, stressed that India, which is currently spending about 1.9 per cent of its GDP on defence, must strategically move toward a 4 per cent target to meet its growing national security and technological needs. 

"Given the increased threat perception in the South Asian region and the critical need to modernise its military capabilities, India must allocate more resources to defense to sustain technological superiority over its adversaries and to meet future operational demands," he said. 

Kanwar told MOFSL that a major shift is expected with higher capex allocation towards the moderisation of Indian armed force, moving from the current 22 per cent to 40 per cent by 2047, with a corresponding rise in R&D expenditure from 1 per cent to 10 per cent of the defence budget. 

He noted that India's aerospace sector is witnessing rapid growth, with major projects led by its top three DPSUs, namely HAL, BEL and Mazagon Dock Shipbuilders. Kanwr said building strong production capabilities and improving productivity are essential for HAL to maintain its role as the primary aerospace OEM and to foster the development of a vibrant aerospace industry in India. 

"Other private players such as Tata Group, Mahindra Group, Aequs, Dynamatic and Bharat Forge have made a successful foray into aerospace manufacturing by leveraging their past experience and partnering with global OEMs," he said.