Mishra Dhatu Nigam, HAL, Paras Defence, other defence stocks power Nifty India Defence up 1.6%; here's why

Defence sector heavyweight stocks like HAL, Bharat Forge, Astra Microwave Products, Paras Defence, Mishra Dhatu Nigam, among others rallied up to the tune of 6% during the trading session on Tuesday, October 6, as investors focused on the latest BrahMos deal and order book momentum in the sector amid constructive outlook and sentiment in the market.

NSE data showed that the Nifty India Defence index gained 1.61% to hit an intraday high of 9,328.45 points during Tuesday’s market, in comparison to 9,180.50 points at the previous equity market close.

After touching the day’s high during the afternoon session, the sectoral benchmark defence index was trading around 1.4% higher at 9,309 points on NSE amid the buying sentiment among investors ahead of the quarterly earnings season.

On October 6, the Ministry of Defence also signed a ₹661 crore contract with BrahMos Aerospace Private Limited to procure BrahMos Fire Control System and Launchers for Indian Navy ships under the Buy (Indian-IDDM) Category.

Companies like BEL, Mishra Dhatu Nigam, among other critical equipment providers, will also remain in the focus of investors after the government’s update.

Equity investors were also focused on several latest corporate updates in the sector, along with the move by India’s Defence Minister Rajnath Singh, who is set to lay the foundation stone of a ₹218 crore facility on Oct. 6, which will be used to manufacture Shakti engines at HAL’s Koraput unit in Odisha.

Market experts predict that while the growth, execution and margin normalisation risks remain in the market, a strong pipeline of India’s defence programs along with emergence of missiles and exports will add to the sector’s tailwind in the medium term.

Defence stocks in focus today

Ministry’s ₹661.50 crore BrahMos deal

The Ministry of Defence signed a contract with BrahMos Aerospace Private Limited on Tuesday, October 6, to procure BrahMos Fire Control System and Launchers for Indian Navy ships under Buy (Indian-IDDM) Category.

The contract is valued at ₹661.50 crore and will have a minimum of 68% indigenous content with participation of several Indian industries including MSMEs.

“The BrahMos System fitted onboard various frontline warships is the Indian Navy’s primary Surface-to-Surface Missile (SSM) system for maritime strike operations,” as per the official statement.

The ministry also said that the weapon system is capable of targeting land and sea targets from extended ranges with pinpoint accuracy at supersonic speed.

Other latest updates

India’s Defence Minister Rajnath Singh is set to lay the foundation stone for a Rs 218 crore new facility linked to Shakti engines at Hindustan Aeronautics Ltd's Koraput unit in Odisha on Tuesday, October 6.

“The event will mark nearly six decades of HAL Koraput’s contribution to India’s aerospace and defence manufacturing capabilities and operational readiness of the Armed Forces,” as per the official statement.

Rajnath Singh will also inaugurate a function marking the delivery of the 2,000th aero-engine by HAL Koraput division in the Sunabeda area.

As per the official statement, setting up a second production line for Shakti engines will add to the capacity of the HAL Koraput division and support the increasing requirements of indigenous helicopter platforms, including the Dhruv Advanced Light Helicopter and Prachand Light Combat Helicopter.

Citing people aware of the development, the news agency PTI reported that Rajnath Singh is expected to reach Sunabeda on Tuesday afternoon after attending programmes of Hindustan Shipyard in Visakhapatnam, where he is scheduled to inaugurate upgraded maritime infrastructure and participate in key shipbuilding milestones.

Bharat Forge-P&W engines contract

In an exchange filing on Monday, Bharat Forge disclosed that the company has secured a long-term contract with Pratt & Whitney Canada to supply mission-critical aerospace engine components.

As per the deal, Bharat Forge will manufacture the engine components at the firm’s aerospace facility in India, which is developed to produce high-performance, high-value, aero-engine products.

“We look forward to supporting Pratt & Whitney Canada’s programs and furthering India’s advancement in aerospace manufacturing expertise,” said Amit Kalyani, Vice-Chairman and Joint Managing Director of Bharat Forge.

Constructive outlook for BEL?

Sharing a constructive outlook for BEL, domestic market experts said that the Indian government’s programmes of Quick Reaction Surface-to-Air Missile, Advanced Medium Combat Aircraft, and major naval programmes are set to power a strong pipeline of large defence orders.

Factors like increasing need for missiles and exports will also emerge as key growth drivers in the medium term.

While growth execution and margin normalisation risks loom over investors, the healthy order pipeline along with long-term defence spending visibility will support the growth of the companies.

The positive momentum combined with the corporate actions adds to the improving sentiment among investors, while concerns still remain about fund outflows from the domestic market amid elevated crude oil prices and US Treasury yields.

BEML launch

Last week, BEML unveiled India’s first indigenously designed and developed 60-Ton Electric Dump Truck, the BH60-EV, at its Mysuru Complex, marking a significant milestone in the development of high-capacity electric mobility solutions for the mining and infrastructure sectors.

The truck, which is designed and developed at BEML’s Mysuru Complex, combines high payload capability with advanced electric powertrain technology and operator-focused engineering, while delivering zero tailpipe emissions during operation.

As per the official statement, BH60-EV is designed to deliver 40-60% lower operating costs compared with conventional diesel-powered equipment, while enabling an estimated annual reduction of around 130 tonnes of CO2 emissions per vehicle, subject to operating conditions.