Budget 2025: HAL, BDL, BEL, MTAR, Data Patterns, Paras Defence, GRSE, Cochin, Mazagon Dock shares in focus today; here's why

Hindustan Aeronautics Ltd (HAL), Bharat Dynamics Ltd (BDL), Bharat Electronics Ltd (BDL), Mazagon Dock Shipbuilders Ltd, Astra Microwave Products Ltd, Cochin Shipyard Ltd, MTAR Technologies Ltd, Paras Defence, Zen Technologies Ltd and Solar Industries India are among over a dozen defence stocks that are in focus today, ahead of the Union Budget 2025 announcements.

Others included Astra Microwave Products Ltd, Garden Reach Shipbuilders Ltd (GRSE), Data Patterns (India), BEML Ltd, Mishra Dhatu Nigam Ltd, (MIDHANI), DCX Systems Ltd and ideaForge Ltd among others. Expectations are that the Budget may see 7-8 per cent rise in allocation, with initiatives emphasising on boosting defence exports and accelerating domestic defence procurement.

Manish Chowdhury of StoxBox sees a modest 6-8 per cent rise in defence capex from Rs 1.72 lakh crore in FY25. From the defense sector, he continues to remain positive on HAL, Mazagaon and DCX Systems, given the large executable order book and sectoral tailwinds.  

The government had provided Rs 6.22 lakh crore for the defence in the FY2024-25. This was a 4.79 per cent hike from last year. For capital expenditure, Rs 1.72 lakh crore was provided in the Budget of July 2024, which includes  border roads, coastal security and innovation through the iDEX scheme.

"Looking ahead to FY 2025-26 we expect a 7-8 per cent increase in defence capital expenditure, which could raise it to Rs 1.9 lakh crore. The key priorities are likely to include modernizing military vehicles, strengthening naval assets and boosting domestic manufacturing to reduce reliance on imports, which currently fulfill 35 per cent of India’s defence needs," said Puneet Singhania of Master Trust Group.

Ajay Garg, CEO at SMC Global Securities said the Defence Ministry’s budget for capital expenditure (capex) is likely to see 10–12 per cent rise and focus on enhancing self-reliance in defense manufacturing under Atmanirbhar Bharat and increasing defense capabilities amidst regional security concerns. He likes stocks such as BEL, HAL and BDL.

After India’s recent launch of two ships to strengthen its maritime presence, analysts believe the government may further enhance naval capabilities, especially in the Indo-Pacific region. There is also likely to be continued emphasis on aerospace and defence upgrades, aligning with the trend of ramping up defence procurement. Prioritizing Indigenous manufacturing under initiatives like Make in India will probably remain a key focus, supporting self-reliance in defence production, said Trivesh D, COO at Tradejini.

Antique Stock Broking is anticipating an 8 per cent increase in allocation to defence, with an increase in ordering of defence equipment, which could be positive for HAL, BDL and BEL. It also sees increased allocation for the Air Force under investment in combat aircraft, combat drones and missiles. It sees focus on indigenisation to continue, which would be positive for all key defence players .

Ravi Singh of Religare Broking sees HAL and BEL as likely key beneficiaries of the forthcoming Budget.

"HAL is favored for its strong growth potential driven by increasing defence contracts and a robust order book. Analysts project significant inflows, making it a solid investment choice. BEL stands out due to its leadership in defence electronics and consistent performance, supported by strong research and development capabilities," he said.

Nuvama sees defence capex to increase 7–8 per cent YoY with higher allocation towards  R&D, UAV/drones, and anti-drone systems. It expects some key large  programmes in the pipeline such as QRSAM, P-75I, LCA Mark 1A and Pinaka to materialise and sees announcements to be skewed towards Air Force and Navy.