The small and midcap sectors are experiencing a significant surge, particularly in the realm of defense stocks. This upward momentum isn’t just a fleeting moment; defense stocks have been on the rise for the past month, largely fueled by Prime Minister Narendra Modi’s commitment to fostering indigenous manufacturing through the "Made in India" initiative. As investors take notice, several companies within this sector have captured attention with their remarkable gains.

Top Smallcap Defense Stocks to Watch

Here are five smallcap defense stocks that have stood out for their impressive performance over the past month:

1. ideaForge Technology

ideaForge Technology has witnessed a staggering 48% increase in its share price in just the last month. Despite this recent growth, the stock has faced challenges, with a 7% decline over the past six months and a 23% drop year-on-year. The firm is recognized as a frontrunner in the Indian Unmanned Aircraft Systems (UAS) market, claiming the largest operational deployment of indigenous UAVs throughout the country. In Q4 FY25, the company reported a net loss of ₹26 crore, compared to a net profit of ₹10 crore in the same quarter last year. Revenue plummeted by 80%, totaling ₹20 crore, a significant drop from ₹102 crore in Q4 FY24.

2. Paras Defence & Space Technology

Paras Defence & Space Technology has enjoyed a 42% surge in its share price over the last month. The stock has performed exceptionally well, delivering a 50% return in the past six months and an impressive 103% over the year. In Q4 FY25, the company reported a remarkable 97% increase in net profit, reaching ₹19.7 crore, up from ₹10 crore during the same quarter last year. Revenue from operations also climbed by 35.8% year-on-year, totaling ₹108.2 crore in Q4 FY25 compared to ₹79.7 crore the previous year. This private sector entity specializes in the design, development, manufacturing, and testing of defense and space engineering solutions.

3. Data Patterns

Data Patterns has seen its stock price climb by 35% in the past month, marking a 17% increase over the last six months. However, the stock has faced a 14% decline over the past year. The company reported a 12% decrease in net profit, amounting to ₹45 crore for Q3 FY25, down from ₹51 crore in the same quarter last year. Revenue also fell by 15% year-on-year, recording ₹129 crore, compared to ₹151 crore in Q3 FY24. The company has yet to release its financial results for Q4 FY25.

4. DCX Systems

DCX Systems has experienced a 37% increase in share price over the last month, while also raising investor wealth by 8% over the past six months and 7% year-on-year. In Q3 FY25, the company saw a 25% year-on-year decline in net profit, totaling ₹10 crore, although revenue increased slightly by 0.93% to ₹200 crore. The company focuses on system integration, manufacturing cables, wire harnesses, and electronic subsystems, and it has yet to announce its quarterly results.

5. Garden Reach Shipbuilders & Engineers (GRSE)

Garden Reach Shipbuilders & Engineers has seen a remarkable 29% rise in its share price in the last month. Over the past six months, it has returned more than 55%, with a staggering 122% gain over the past year. In Q4 FY25, GRSE’s net profit more than doubled, reaching ₹244 crore, compared to ₹112 crore in Q4 FY24. The company’s revenue from operations also soared by 62% year-on-year, totaling ₹1,642 crore in Q4 FY25, up from ₹1,015.7 crore in the same quarter of the previous year.

As the defense sector continues to attract investor interest, these smallcap stocks are certainly ones to watch. The combination of government initiatives and growing market demand could pave the way for even more substantial growth in the coming months.