The Nifty Defence index rose as much as 2.6% intraday, logging its fourth consecutive session of gains. Shares of Cochin Shipyard jumped 5.6% to Rs 1923.85 on the BSE, marking their sixth straight day of advances and an 18% rally over that stretch.
GRSE climbed 7.6% to Rs 2624.85. Other names, including Hindustan Aeronautics (HAL), Mazagon Dock Shipbuilders, and Paras Defence & Space Technologies, added between 1% and 2%.
Rafale deal buzz
Momentum was fueled by reports that the Defence Ministry is reviewing a major Indian Air Force proposal to acquire 114 “Made-in-India” Rafale fighter jets in a deal estimated to exceed Rs 2 lakh crore. According to The Times of India, more than 60% of the components would be manufactured domestically under the project, which envisions a partnership between France’s Dassault Aviation and Indian aerospace companies.
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According to reports, the plan will be tabled before the Defence Procurement Board before moving to the Defence Acquisition Council, the final decision-making body. If cleared, it would significantly expand India’s Rafale fleet: the IAF currently operates 36 aircraft, with another 36 on order for the Navy, taking the potential total to 176.
Analysts urge caution
While sentiment remains bullish, some analysts flagged stretched near-term valuations. Nischal Maheshwari, a market strategist, said, “Defence has a very long runway. For the next five years, there is strong visibility in most defence companies.” But he warned: “If you want to invest in defence stocks, it’s better to wait for a correction.”Maheshwari highlighted the robust order pipeline, noting HAL holds orders worth Rs 2 lakh crore, while Mazagon Dock and Cochin Shipyard each have backlogs of Rs 50,000-70,000 crore. “New deals are welcome,” he added, “but execution capacity remains a limiting factor.”
Amnish Aggarwal of Prabhudas Lilladher described defence as a “structural story” supported by government policies aimed at self-reliance in military production.
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Long-term play
Veteran investor Ajay Bagga echoed the optimism, calling defence a “multi-decade opportunity.” He added, “India can produce low-cost, high-quality weapon systems. First, we’ll serve the domestic market, and then move to exports.”
The government’s Make in India and Aatmanirbhar Bharat initiatives have accelerated domestic defence manufacturing, cementing the sector as a long-term favourite among investors. Analysts say large deals such as the Rafale project could further propel Indian defence companies, though concerns about execution timelines and valuations remain.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
