In the twelve months since the attack, the index has surged 37%. The combined market capitalisation of its 18 constituent stocks has swelled by Rs 2.9 lakh crore to Rs 11.92 lakh crore. Three stocks have delivered multibagger returns. And the government has unleashed Rs 9.3 lakh crore in defence procurement approvals in FY26 alone, nearly four times the previous year.
MTAR Technologies leads the pack with a 277% return since Pahalgam. Apollo Micro Systems has surged 129%, and Data Patterns is up 106%, both firmly in multibagger territory.
The rally has been broad-based as Axiscades Tech, Dynamatic Technologies, Bharat Forge, GRSE, Astra Microwave, Paras Defence, and Bharat Electronics (BEL) have all gained over 50% in the period. Even HAL, the maker of the Tejas fighter jet, is up 12%.
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Rs 9.3 Lakh Crore Order Book
The procurement machinery has moved at an unprecedented pace. The Defence Acquisition Council approved proposals worth Rs 2.38 lakh crore on March 27 alone, led by the Indian Air Force, driven primarily by the procurement of the S-400 Long Range Surface-to-Air Missile System and Medium Transport Aircraft. Among domestic beneficiaries, BEL is a key participant in three to four orders, with potential upside also for HAL, L&T, and GRSE.
The bigger picture is even more striking: year-to-date FY26 Acceptance of Necessity clearances have surged to Rs 9.3 lakh crore, nearly four times the Rs 2.5 lakh crore cleared in the same period last year. The current conflict in the Middle East is adding a further tailwind, likely to drive higher global defence spending as nations prioritise security and military preparedness.Brokerages are broadly bullish but with eyes open to execution risks. Nomura is “structurally positive on Defence Electronics with a focus on players with indigenised tech and IP.” Its top pick is BEL, with near-term upside contingent on the QRSAM programme. It also prefers Data Patterns and Solar Industries for stronger medium-term growth, while calling HAL a limited-downside play with upside on execution recovery.
Motilal Oswal sees India’s defence sector as “well positioned to benefit from both rising domestic procurement and increasing export opportunities, supported by the government’s push for indigenisation and a growing reputation in global arms markets.” However, it flags a key near-term watch: supply chain constraints, particularly around specialised components and imported subsystems, that could affect execution timelines on certain platforms.
HDFC Securities is equally constructive, calling it “a multi-year compounding story, combining sustained order inflows and efficient execution.” The brokerage prefers electronics value chain players and companies with proven technological capabilities capable of transitioning from subsystem manufacturers to full solutions providers.
What began as a national tragedy has, through the brutal logic of markets, become one of the most consequential investment themes in Indian equities this year. With the government’s indigenisation push accelerating, export pipelines building, and geopolitical tensions keeping defence budgets elevated globally, the Rs 2.9 lakh crore wealth creation since Pahalgam may only be the opening chapter.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)