HAL, BDL, BEL, Paras Defence, GRSE, Cochin Shipyard, Mazagon Dock shares in focus amid India-Pak tensions

Shares of defence makers including Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), Bharat Electronics Ltd (BEL) and Paras Defence are in focus on Wednesday after Indian missiles hit nine targets in Pakistan and Pakistan-occupied Kashmir (POK) in retaliation to the Pahalgam terror attack that killed 26 civilians.

HAL is a Bengaluru-based aerospace PSU that builds LCA Tejas and Sukhoi Su-30MKI. BDL is a leading manufacturer of guided missiles, underwater weapons, and allied defense equipment for the Indian Armed Forces, including Akash missiles. BEL is engaged into making defence communication products, land-based radars, naval systems and electronic warfare systems. 

Data Patterns, BEML, Garden Reach Shipbuilders and Engineers, Mazagon Dock Shipbuilders, and Cochin Shipyard are some other defence stocks that are in focus today.  

A total of nine strategically selected sites — identified as key hubs for planning cross-border terror operations — were struck. It is suggested that the operation was focused, measured, and non-escalatory, as no Pakistani military facilities were targeted.

Defence stocks were gaining tractions even since the India-Pakistan tensions flared up.  

Nuvama in note last month said it sees $130 billion defence opportunity over the next five years. "Air Force and Navy would account for the bulk of it due to the need for modernisation drives for their arsenals and larger programs/systems (LCA Mk-IA & Mk-II, AMCA, IMRH, QRSAM, Astra Mk-I & Mk-II, P-75I, etc). This makes up a substantial part of DPSUs’ pipeline of Rs 8.7 lakh crore," it said.

Ongoing modernisation programs for Su-30, MiG-29 and Mirage-2000 are focused on upgrading avionics, high-power/AESA radars, upgraded missiles (Astra, BrahMos, etc), electronic warfare suites and engines, among others, it said.

"We prefer the sub-segment Defence Electronics, which is expected to grow 1.5–2x of defence budget outlay (7–8 per cent CAGR over next five years) given ongoing modernisation efforts (major reforms expected in CY25) and larger programs in the pipeline for Air Force and Navy," the brokerage said last month.