The defence sector stocks have been shining through 2025. The Nifty Defence Index has surged 27% so far this year. On a six-month basis, the Index is up 46%, while in just the past week, it has added 7%. The optimism in the sector got a further boost when the Defence Ministry unveiled the 15-year roadmap.
Defence index up 27% in 2025 – Stocks leading the charge
In Tuesday’s session, the momentum was visible across the list of defence sector stocks, with all 18 constituents of the Nifty Defence Index trading in the green. The index surged nearly 2% in the intraday trading session today.
Garden Reach Shipbuilders & Engineers jumped 6% intraday, while Cochin Shipyard advanced 4%. Zen Technologies and Unimech Aerospace & Manufacturing also added about 3% each in the intraday trading session.
Bharat Electronic shares price is up 2% in the intraday trading. Share price of Hindustan Aeronautics in the intraday trading session is up 1%.
Defence Sector: Optimism emerges from 15-year roadmap
Part of the optimism stems from policy and project announcements. India’s latest TPCR-2025 or the 15-year roadmap outlined for the Defence Industry highlighted as many as 457 programs. This is almost double compared to the earlier TPCR 2018.
Furthermore, nearly half of these programmes, that is about 224, are in cyber systems, electronics, and electronic warfare.
As per the InCred Equities report, “Survivability, command-and-control and lethality will be won in the electronics and cyber domains.” This shift shows India is not just buying hardware but also prioritising software-driven defence capabilities, including artificial intelligence, networked communications, and smart jamming systems.
The scale of investment is significant. A focus on subsystem development opens the door for smaller component makers, MSMEs, and start-ups, reducing the dependence on a few large integrators.
According to the report, this is “a classic industrial policy move to deepen and derisk the domestic supply chain.”
Why defence stocks are rising in 2025: Brokerage report
Some of the factors driving the sharp rally in defence stocks this year are as follows –
1. The government’s push for indigenisation is creating large opportunities for domestic firms across electronics, software-defined systems, and networked platforms.
2. Another reason is India’s urgent need for advanced air and space defence systems is leading to accelerated spending, with projects aimed at closing operational gaps in radar and surveillance coverage.
3. The ambitious Sudarshan Chakra project, with an estimated cost of Rs 4 trillion, is expected to be a game changer.
As per InCred Equities report, “Sudarshan Chakra is an ambitious, Rs 4 trillion integrated air and space defence program.” Spread across layered missile defence, over-the-horizon radars, high-altitude pseudo satellites, and directed-energy weapon trials, the program is designed to create a resilient architecture for India’s long-term security.
4. Defence spending is skewed towards electronics and subsystems, which benefits a wide range of listed players in the ecosystem.
5. The brokerage also in its report noted that the combination of policy reforms, budgetary allocations, and private sector participation is driving consistent re-rating of defence stocks. As noted in the report, “TPCR-2025 lists 457 items (vs. 221 in TPCR 2018), shifts >50% to electronics, EW & space; prioritizes sub-systems vs. platforms and boosts indigenization.”
‘Buy’ ratings on key defence stocks
According to InCred Equities, several companies stand out as key beneficiaries of the government’s electronics and space defence push under TPCR-2025 and the upcoming Sudarshan Chakra project. The brokerage has given ADD rating to Hindustan Aeronautics and Bharat Electronics.
For Hindustan Aeronautics, the brokerage has maintained an ‘ADD’ rating with a target price of Rs 6,325 against the current market price of Rs 4,840.
HAL’s order book stands at around Rs 2.4 trillion, supported by a Rs 1 trillion order pipeline that ensures strong revenue visibility.