Do you still hold these heavily fallen defence stocks? Here's a good news for you!
Explore the budget expectations for the defence industry to stay updated and seize emerging opportunities.
Defence stocks have been under significant selling pressure, with prices significantly lower than their 52-week highs. However, any favourable announcements in the upcoming Budget could provide the much-needed catalyst for a strong rebound, offering investors the boost they've been eagerly awaiting.
As the Union Budget 2025-26 approaches, stakeholders in India's defence industry anticipate strategic allocations to bolster the nation's security and technological capabilities. In the previous fiscal year, the defence budget saw a 4.79 per cent increase, totalling Rs 6.22 lakh crore. However, experts argue that this increment may be insufficient to address critical modernization needs amid evolving security challenges.
For the upcoming budget, there is an expectation of a moderate increase in defence spending, maintaining the allocation around 1.9 per cent to 2 per cent of the GDP, consistent with recent years. An estimated allocation of Rs 1 lakh crore is expected to be earmarked for operational preparedness, excluding funds designated for the Border Roads Organisation (BRO).
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Industry leaders are advocating for enhanced funding to accelerate the indigenization of defence production, aiming to reduce reliance on imports and strengthen domestic manufacturing capabilities.
The government's "Make in India" initiative has spurred significant interest in domestic arms manufacturing, leading to a notable surge in defence stocks. Retail investors have increasingly invested in companies like Hindustan Aeronautics and Bharat Dynamics, anticipating substantial growth in the sector.
To capitalize on this momentum, the budget is expected to introduce measures that encourage private sector participation and public-private partnerships, thereby fostering innovation and efficiency in defence production.
Additionally, there is a call for streamlined procurement processes to expedite the acquisition of advanced military assets. The Defence Acquisition Council's recent approval of proposals worth USD 17 billion for military assets underscores the need for efficient procurement to enhance operational readiness.
The budget is also expected to allocate significant funds for the procurement and modernization of advanced defence systems, including fighter jets, missile systems, and naval assets such as the Indigenous Aircraft Carrier (INS) Vikrant. These investments aim to enhance India's air and naval superiority, supporting the strategic defence needs in an increasingly complex security environment.
The government is also driving reforms in emerging domains such as cyber and space, while focusing on cutting-edge technologies like artificial intelligence (AI), machine learning (ML), hypersonic, and robotics to bolster defence capabilities.
Stocks in Focus: Hindustan Aeronautics Ltd, Paras Defence and Space Technologies, Bharat Dynamics Ltd, Cochin Shipyard Ltd, Mazagon Dock Shipbuilders Ltd, Garden Reach Shipbuilders
Stay tuned for in-depth insights and quick updates on Budget Day.