Paras Defence, Apollo Micro Systems, other defence stocks rise up to 4% ahead of Defence Acquisition Council meet

Defence sector stocks like Paras Defence, Apollo Micro Systems, Solar Industries, MTAR Technologies, among others surged on Monday, September 7, as investors focused on the central government’s Defence Acquisition Council (DAC) meeting, which is estimated to yield a series of military procurement deals.

The Ministry of Defence, led by Minister Rajnath Singh, is scheduled to hold a Defence Acquisition Council (DAC) meeting on September 7 at the national capital, Delhi, as the military aims to acquire several air platforms, armoured platforms, naval warships, and missile systems, among other things.

Through this modernisation initiative, and the earlier announced central government’s ₹3,070 crore plan to acquire the military equipment, the companies manufacturing the same are expected to be the potential beneficiaries from government order inflows in the upcoming period.

NSE data showed that the sectoral benchmark, Nifty India Defence, surged 1.22% to an intraday high of 9,827.65 points during Monday’s market, in comparison to 9,708.85 points at the previous equity market close.

Stocks like Paras Defence, Solar Industries, Apollo Micro Systems, Solar Industries, MTAR Technologies, Axiscades Tech, BEML, among others, are all companies which are involved in making defence equipment.

Hence, investors pinning their hopes towards potential order updates in the sector acted as a momentum trigger during the trading session on September 7, pushing the defence stocks higher on Monday’s market.

Latest media reports from ANI, citing sources, suggested that the Ministry of Defence is set to announce a proposal to modify the Russian-made Sukhoi (SU) 30 MKI aircraft with RVV BD air-to-air missiles, which can potentially hit high-speed targets at 300 kilometres.

The report also mentioned that the DAC meeting is potentially looking to overhaul the SU-30 KMI aircraft at Hindustan Aeronautics (HAL) with AL-31 engines, while also giving the company a significant order for ALH Mark 3 helicopters.

Defence stocks in focus today

Government’s ₹3,070 crore business plan

On August 18, the Ministry of Defence announced its ₹3,070 crore business opportunity plan through which the government aims to purchase 405 units of “strategically important items” comprising a broad range of defence platforms and systems.

Air platforms like Advanced Light Helicopter, Light Utility Helicopter, Su-30MKI, Light Combat Aircraft, AL-31FP Engine, ground armoured vehicles like T-72, T-90 and BMP-II, Naval warships, and missile systems such as Konkurs-M, Invar and MRSAM.

Apart from these equipments, electronic equipment, including radars, sonars, fire control systems and satellite communication systems, among other things, will also be acquired as part of this move.

The Ministry also said that High Explosive Anti-Tank ammunition and other critical defence equipment will also be acquired as part of the business opportunity.

“Upon successful indigenous development, these items will be procured from the Indian industry,” the Ministry of Defence said in the official announcement.

The government aims to further expand opportunities for Indian companies, strengthen the domestic defence manufacturing ecosystem to promote investment & innovation, and contribute to reducing dependence on imports.