Defence Stocks Get Fresh Round Of Ammunition As DAC Clears Rs 2.12 Lakh Crore Proposals

Defence stocks rallied in early trade on October 27 after the Defence Acquisition Council (DAC) approved capital acquisition proposals worth an estimated Rs 2.12 lakh crore for the armed forces. The approvals cover military vehicles, artillery systems, helicopters, air defence equipment, surveillance systems, drones and naval platforms, with around 82 per cent of the proposed procurements earmarked for Indian industry.

Hindustan Aeronautics (HAL), which manufactures aircraft, helicopters and aero-engines for the armed forces, rose 2.51 per cent to Rs 4,894.80 at 9:47 AM. Bharat Electronics (BEL), a defence electronics company specialising in radars, communication systems, electronic warfare equipment and weapon systems, gained 2.44 per cent to Rs 371.85.

BEML, which manufactures high-mobility vehicles, defence equipment and heavy engineering products, advanced 2.81 per cent to Rs 1,896.50.

The rally extended to other listed defence companies, including those engaged in missile systems, military electronics, shipbuilding, surveillance technology and specialised defence manufacturing.

Apollo Micro Systems, which develops electronic and electromechanical systems for defence and aerospace applications, climbed 7 per cent to Rs 439.65. Paras Defence and Space Technologies, which specialises in defence and space optics, defence electronics and electromagnetic pulse protection systems, rose 6.52 per cent.

Data Patterns (India), a supplier of electronic systems for defence and aerospace platforms, gained 5.79 per cent. Astra Microwave Products, which manufactures radio frequency and microwave systems used in radars, electronic warfare and communication equipment, advanced 5.55 per cent.

Zen Technologies, which develops combat training simulators and anti-drone systems, rose 3.42 per cent. Garden Reach Shipbuilders and Engineers (GRSE), a shipbuilder specialising in warships and other naval vessels, gained 4.45 per cent.

Mishra Dhatu Nigam, which produces special alloys and high-performance materials for defence and aerospace applications, was up 3.73 per cent.

The Nifty India Defence index, which constitutes 22 stocks that broadly represent the Defence theme, rose nearly 2 per cent.

Smaller Defence Companies Gain Up To 12 Per Cent

Buying was particularly strong in several smaller defence companies. C2C Advanced Systems, which develops defence electronics and command-and-control systems, surged 11.76 per cent.

Krishna Defence and Allied Industries, which manufactures specialised defence and marine equipment, climbed 6.51 per cent. NIBE, which operates in defence engineering and manufacturing, rose 5.52 per cent.

MTAR Technologies, a precision engineering company that supplies critical components and assemblies for defence and aerospace applications, was locked in at its 5 per cent upper circuit. Sigma Advanced Systems, which operates in defence and aerospace engineering and systems manufacturing, was also locked in at its 5 per cent upper circuit.

What the Rs 2.12 Lakh Crore Defence Proposals Cover

The rally followed the Defence Acquisition Council's decision on October 26 to accord Acceptance of Necessity (AoN) to capital acquisition proposals worth approximately Rs 2.12 lakh crore. Defence Minister Rajnath Singh chaired the meeting.

AoN represents in-principle administrative approval for a proposed acquisition. It is an important step in the procurement process, but does not mean that contracts have been awarded or that companies have secured orders.

For the Indian Army, the council approved proposals covering High Mobility Vehicles, self-propelled tracked gun systems, gunshot response systems, light multi-role helicopters, very short-range air defence systems and platform-based counter-unmanned aerial systems.

The proposals also include long-range unmanned aerial systems, surveillance unmanned aerial vehicles, integrated surveillance and strike systems, and long-range kamikaze drone systems.

The Army's new high-mobility vehicles are intended to improve logistics and movement across difficult terrain. Self-propelled tracked gun systems are expected to provide mechanised formations with greater mobility and firepower, while gunshot response systems will improve real-time situational awareness.

The proposed light multi-role helicopters will serve both the Army and the Indian Air Force for reconnaissance, surveillance, combat, search and rescue, and humanitarian assistance and disaster relief operations.

The very short-range air defence systems will help counter small aerial threats, while counter-drone systems are expected to improve the survivability of tanks on the battlefield.

For the Indian Navy, the council cleared the procurement of Active Offboard Decoy Systems and other major naval platforms. The decoy systems are intended to strengthen protection against modern anti-ship missiles. Indigenous naval platforms are expected to add modern warfare capabilities and improve the Navy's combat strength.

The Indian Air Force also received approval for helicopters, air defence systems, weapons and mobile X-band Doppler weather radar systems. Special utility helicopters will help meet air transport requirements, while the weather radars will provide high-resolution, localised surveillance in forward areas.

According to the Ministry of Defence, approximately 82 per cent of the procurements covered by the approvals will be sourced from Indian industry.

The push for domestic procurement has brought defence companies into focus. But not every company will benefit equally. It will depend on which tenders they qualify for and how many orders they eventually win.