Top 5 best defence sector stocks in India 2024

The defense sector is crucial in protecting countries by producing, designing, and upkeeping military gear, structures, and supplies. India's significance in this sector is highlighted by its attempts to decrease dependence on foreign defence imports and encourage self-reliance and domestic production. Consequently, numerous companies in the defense sector have gained advantages from this "self-reliant India" proposal. In this article, we will examine the possible future of India's defense sector and highlight the top defense stocks in the country.

1. Bharat Electronics 

Established in 1954, Bharat Electronics Limited (BEL) is a Navratna Public Sector Undertaking (PSU) that focuses on producing cutting-edge electronic products for the Indian Defence sector. BEL manufactures various defense equipment and systems such as defense communication devices, electronic warfare systems, land-based radars, naval systems, C4I systems, weapon systems, and avionics.

In addition to its defense sector stocks, BEL's non-military activities encompass a range of areas including cybersecurity, electric vehicle technology, rail transportation, electronic government systems, domestic security, civilian radar systems, complete projects, components, telecommunications, and broadcasting systems.

The company partners with both local and international firms to offer a diverse range of products which include electronic voting machines, radar transmitters, sonar-based technology, and ballistic missile systems.

2. Hindustan Aeronautics Limited  (HAL)

Formed in December 1940, Hindustan Aeronautics Limited (HAL) is a prominent aerospace and defense corporation headquartered in Bangalore, India. As a significant player in the defense sector stocks, HAL specializes in the design, development, production, repair, overhaul, upgrade, and maintenance of a range of products such as aircraft, aero engines, avionics, helicopters, accessories, and aerospace structures.

The company offers various aircraft such as HAWK, Su-30 Mki, Light Combat Aircraft (LCA), Dornier, Intermediate Jet Trainer (IJT), and HTT-40 in its product line. In addition, it manufactures helicopters such as Dhruv, Chetak, Cheetah, Lancer, Light Combat Helicopters (LCH), Cheetah, and Light Utility Helicopters (LUH).

3. Bharat Dynamics Ltd

BDL is a small-cap company that specializes in creating and producing underwater guided weapon systems. It was founded on July 16th, 1970. The stock has a Compound Annual Growth Rate (CAGR) of 16.69% over the past 5 years.

4. Mazagon Dock Shipbuilders Limited (MDSL)

MDSL, a significant player in the defense sector stocks, is a prominent Indian shipbuilding company that primarily focuses on building warships and submarines for the Indian Navy. The company has just finished a number of notable projects, such as the Scorpene-class submarines and the Visakhapatnam-class guided-missile cruisers. MDSL possesses a robust order backlog totaling over 7,000 crores, which incorporates orders from Coast Guard, ONGC, and exports. The company's emphasis on improvement and expansion of capacity positions it favorably to take advantage of upcoming opportunities.

5. Garden Reach Shipbuilders and Engineers

 In 2023, the stock prices of Kolkata's Garden Reach Shipbuilders and Engineers (GRSE), a shipyard and manufacturer of naval and commercial vessels, increased by 80%. The defense PSU is expecting to achieve its highest revenue in FY25 and is targeting to sustain an order book worth Rs 24,000 crore by the end of the current year.

The company's revenue from operations between April 2023 and December 2023 reached Rs 2,577 crore, showing a 31% increase compared to Rs 1,960 crore in the previous year. The management expressed optimism about continuing the positive trend in the upcoming quarters as well.

FAQ’s

Q. Is defence a good sector to invest in?

A. The Indian good defence stock has been experiencing steady growth, driven by the government's focus on self-reliance and the development of the military forces. With a strong order book and good growth possibilities, the current situation presents an ideal business chance for military stocks.

Q. Why invest in defence stocks?

A. “Investing in defense companies contributes to our national security, defends the civil liberties we all enjoy, while delivering long-term returns for pension funds and retail investors,” it said.

Q. Which sector will boom in 2025?

A. IT sector: Double-digit growth seen in IT sector in 2025, 2026 and 2027: DD Mishra, Gartner - The Economic Times.

Q. What is the future of Indian Defence sector?

A. The government aims to nearly triple India's total annual defence production to Rs 3 lakh crore by 2028-29. The target for defence exports is more than double at Rs 50,000 crore as against Rs 21,083 crore at present.

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