India’s latest round of procurement approvals for defence has far reaching implications as per the brokerage firm, Nomura. The brokerage has released a detailed report on India’s defence sector, highlighting key developments from the latest Defence Acquisition Council (DAC) meeting held on July 3 and the stock picks based on the top beneficiaries.
As per the brokerage report, these decisions point to the manufacturing, with major focus emerging for domestic defence companies. Nomura sees Bharat Electronics, Larsen & Toubro, and select defence shipyards as key beneficiaries.
Let’s take a look the brokerage say on this sector –
Nomura on India’s defence sector: Over Rs 1 lakh crore projects approved
The Defence Acquisition Council has approved “Acceptance of Necessity” (AoN) for 10 capital acquisition proposals worth nearly Rs 1.05 lakh crore. These approvals fall under the Buy – Indian (Indigenously Designed, Developed and Manufactured or IDDM) category, which mandates sourcing from domestic players.
The list of approved procurements includes surface to air missiles, electronic warfare systems, armoured recovery vehicles, moored mines, and submersible autonomous vessels, among others.
As per the brokerage report, these approvals are likely to enhance mobility, air defence, supply chain systems, and overall operational preparedness of the armed forces.
Nomura on India’s defence sector: QRSAM project gains momentum
One of the most notable approvals is for the Quick Reaction Surface-to-Air Missile (QRSAM) system, a compact and mobile air defence solution.
According to Nomura, this project is estimated at Rs 30,000 crore, and the contract could be awarded to Bharat Electronics (BEL) by the end of 2025. The QRSAM is designed for rapid deployment and can engage multiple targets from a single platform.
BEL is responsible for the command and control systems, radars, and tracking modules, while Larsen & Toubro (L&T) develops the launcher, and Bharat Dynamics manufactures the missiles.
The QRSAM incorporates advanced radar seekers and countermeasure-resistant technologies. It is currently 90% indigenised, with the potential to reach 99%. Nomura noted, “Probability of receiving this contract by Bharat Electronics … has increased.”
Nomura on India’s defence sector: Mine countermeasure vessel programme back on track
The DAC has also revived the long-delayed Mine Countermeasure Vessel (MCMV) program, which had previously been shelved due to cost and technology transfer issues.
According to Nomura, a formal Request for Proposal (RFP) will be issued to Indian shipyards, including Goa Shipyard (unlisted). The first vessel is expected to be rolled out 7-8 years after contract finalisation.
Nomura’s preferred defence stocks: Top picks
Based on the expected contract flow and project involvement, Nomura has identified the following companies as key beneficiaries of the recent policy approvals-
Bharat Electronics – Buy
As noted in the report BEL is likely to win the QRSAM order due to its extensive role in radar, command systems, and fire-control equipment.
Larsen & Toubro – Buy
L&T plays a key role in the QRSAM project by supplying the missile launch systems.
Bharat Dynamics – Not rated but procurement decision seen as a positive
Although not rated by Nomura, BDL is the primary missile manufacturer for the QRSAM program and could see significant subcontracting orders.
Nomura on Indian defence shipyards
Nomura has a positive outlook on Indian defence shipyards, especially Goa Shipyard, given their likely involvement in the MCMV project.