With tensions escalating between Israel and Iran, global markets, including India’s, are reacting cautiously. Last week, Indian stocks saw a significant drop, but there was some recovery over the weekend. Despite the pressure from the Israel-Hamas war, experts believe that some Indian defence stocks are likely to deliver strong returns.
Why Defence Stocks Are Gaining Attention
Experts say the ongoing crisis in the Middle East has brought defence stocks into the spotlight. For medium- to long-term investors, defence companies with solid order books are expected to perform better than others.
Focus on Indian Defence Stocks
Commenting on the impact of the Israel-Iran conflict, Santosh Meena, Head of Research at Swastika Investment, said, “While the conflict itself may not directly benefit India’s defence sector, the rising geopolitical tensions have shone a light on the industry. Global defence budgets, including India’s, are increasing in response to these tensions. The ‘Atmanirbhar Bharat’ (Self-Reliant India) initiative has also boosted the sector, leading to a positive re-evaluation of these stocks.”
Anshul Jain, Head of Research at Lakshmishree Investment and Securities, added, “Companies like Premier Explosives, Solar Industries, and Data Patterns (India) Ltd. are well-positioned to benefit from the increased focus on defence due to the Israel-Iran conflict.”
Meena also pointed out that long-term investors could find value in stocks such as Cochin Shipyard, GRSE, Mazagon Dockyard, and major defence firms like HAL and BEL, especially after recent price corrections.
Top Defence Stocks to Watch
Here are three defence stocks recommended by Anshul Jain for the current situation:
- Premier Explosives: This company supplies to sectors like mining, infrastructure, and defence. It’s the only Indian company exporting fully assembled rocket motors and solid fuels for Barak missiles, which are relevant to the current conflict. Premier Explosives has a strong order book of ₹8.9 billion, with 85% of it coming from defence contracts. Quarterly revenue has surged to ₹83 crore from ₹62 crore last year. The company is also investing ₹860 crore in new manufacturing plants for mines and ammunition under the “Atmanirbhar Bharat” initiative.
- Solar Industries: A leading manufacturer of explosives and defence products, Solar Industries has secured large orders like Pinaka rockets. It has ₹440 crore in export orders and an overall order book of ₹3,650 crore. The company also recently acquired Problast in South Africa, reflecting its global ambitions. Solar Industries posted a record EBITDA of ₹470 crore and a net profit of ₹300 crore for the first quarter of FY25. Their strategic focus on ammunition and the space sector positions them for significant growth.
- Data Patterns: This fast-growing company in defence and aerospace electronics is benefiting from India’s import restrictions on defence items. Data Patterns’ revenue jumped to ₹560 crore in 2024, supported by projects from the Defence Research & Development Organisation (DRDO). Their order book is strong at ₹1,140 crore, and they expect to secure between ₹2,000 crore and ₹3,000 crore in future projects. The company provides advanced radar and electronic warfare systems to meet the military’s varied needs.
These defence stocks are being closely watched, with experts advising investors to consider them as potential long-term investments during the current geopolitical tensions.
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