In a significant boost for the Indian defense sector, shares of key players like Bharat Dynamics and BEML saw remarkable gains, soaring as much as 5% following the government’s green light for military hardware purchases exceeding ₹54,000 crore. This surge in share prices reflects investor confidence as the Defence Acquisition Council (DAC) approved a series of capital acquisition proposals designed to enhance the nation’s military capabilities.

Major Capital Acquisition Approvals

The DAC’s recent meeting on Thursday yielded Acceptance of Necessity (AoN) for eight crucial proposals, collectively valued at over ₹54,000 crore. Among these initiatives are:

• Airborne Early Warning & Control (AEW&C) aircraft systems to revolutionize combat capabilities.
• Advanced Varunastra torpedoes, developed domestically for the Indian Navy.
• An upgraded 1350 HP engine for T-90 tanks, improving mobility, especially in challenging terrains.

This strategic move not only aims to bolster India’s defense readiness but also emphasizes self-reliance in military manufacturing.

Enhancing Efficiency in Defense Procurement

In addition to approving new projects, the DAC is focused on streamlining the capital acquisition process. The defense ministry announced new guidelines aimed at reducing timelines, making the procurement process quicker and more efficient. This improvement is expected to significantly enhance the operational readiness of the armed forces.

A Promising Future for Domestic Manufacturers

For the fiscal year 2025, the DAC has authorized AoNs amounting to approximately ₹2.2 lakh crore across various procurement categories, reinforcing the push for domestic manufacturing as outlined in the Defence Acquisition Procedure (DAP)-2020.

• The share of domestic procurement has jumped from 54% in FY19 to 75% in recent years, showcasing a promising trend.
• Analysts from Antique Stock Broking highlight this as a golden opportunity for Indian defense firms such as PTC Industries, Mazagon Dock Shipbuilders, Hindustan Aeronautics, and Bharat Electronics.

Top Defense Stock Recommendations

Investors looking to capitalize on this bullish trend can consider the following recommendations from Antique Stock Broking:

• PTC Industries: Buy with a target price of ₹19,639.
• Bharat Electronics: Buy with a target price of ₹376.
• Bharat Dynamics: Buy with a target price of ₹1,351.
• Hindustan Aeronautics: Buy with a target price of ₹4,887.
• Mazagon Dock Shipbuilders: Buy with a target price of ₹2,757.
• Garden Reach Shipbuilders & Engineers: Buy with a target price of ₹1,783.

This recent surge in defense stocks not only highlights the government’s commitment to strengthening national security but also presents a lucrative opportunity for investors in the booming defense manufacturing sector.