Defence stocks extended their record run on May 26, pushing the Nifty India Defence index up over 1 percent, extending the gains for a third consecutive session.
BEML shares were the top gainer on the index, soaring over 15 percent after the company reported a 12 percent on-year jump in net profit to Rs 288 crore for the fourth quarter of the financial year 2025. Its revenue from operations meanwhile rose over 9 percent on-year to Rs 1,652.53 crore for the quarter under review.
Data Patterns shares followed, rising nearly 4 percent. Solar Industries shares rose over 3 percent, while and Mazagon Dock Shipbuilders shares were up around 2 percent. Hindustan Aeronautics (HAL) and DCX India shares were up nearly 1 percent each.
Bharat Dynamics (BDL) and Bharat Electronics (BEL) shares ended the session in the green with marginal gains.
Despite the strong upturn in the sector, Cochin Shipyard, Paras Defence and Garden Reach Shipbuilders and Engineers (GRSE) shares closed in the red.
During the latest episode of his monthly radio show 'Mann ki Baat' released on April 25, Prime Minister Modi hailed the role of indigenously developed defence equipment in the success of 'Operation Sindoor', describing it as a 'testament to India's blood and sweat', and a reflection of a self-reliant nation.
"Our soldiers destroyed terror bases; it was their indomitable courage, along with the power of weapons, equipment and technology made in India. After this campaign, a renewed energy is visible in the whole country regarding 'Vocal for Local'," PM Modi added.
"The sweat of everyone, our engineers, our technicians, is involved in this victory. From our engineers, technicians, Operation Sindoor is testament to India's blood and sweat and an example of the power of 'Made in India'," he added.
In recent days, defence shares have seen significant volatility after a record run following Operation Sindoor. While the sector remains buoyed by Make-in-India tailwinds, strong export interest, and rising capex by both government and private firms, analysts are flagging frothy valuations. "Given current valuations, any earnings disappointment could derail the momentum,” said Pankaj Kumar, VP – Fundamental Research at Kotak Securities. “Right now, these stocks are riding strong sentiment, but the bar is high," he said.
"The run-up in defence stocks is partly driven by rising India-Pakistan tensions, which have reaffirmed the sector’s strategic relevance," said Divyam Mour, Research Analyst at SAMCO Securities. "...price-to-earnings multiples have stretched, especially for private companies with aggressive growth expectations."
Mour said that the long-term drivers remain intact, but selective entry at more reasonable levels may be prudent. "Any pullback or consolidation could be an opportunity to buy into quality defence names with structural tailwinds," he added.
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