Putin to visit India today: Defence stocks in green; analysts say HAL, BDL, BEL likely to benefit

Russian President Vladimir Putin will visit India to attend the 23rd India-Russia Annual Summit at the invitation of Prime Minister Narendra Modi.

The shares of Indian defence companies were trading in green on December 4 as Russian President Vladimir Putin visits India to attend the 23rd India-Russia Annual Summit at the invitation of Prime Minister Narendra Modi.

Analysts have noted that few of the major defence players will likely benefit as expectations for a defence pact between India and Russia remain high.

On his first visit in four years to New Delhi, Putin will be accompanied by his defence minister, Andrei Belousov, and a wide-ranging delegation from business and industry.

What Putin's visit means for Indian defence ecosystem?

Russian President Vladimir Putin's two-day state visit to India highlights a renewed emphasis on defence ties, said Pranay Aggarwal, Director and CEO of Stoxkart. He added that Putin being joined by key defence officials and arms export leaders have raised expectations that the two sides may advance discussions on expanding air defence systems, introducing cutting-edge missile technologies, and procuring advanced stealth fighters, complemented by a new logistics agreement for shared military support.

Aggarwal added that the ongoing summit is expected to accelerate India's Russia-related procurements in air defence and aviation in the near term. The sector's outlook is optimistic, although valuations appear elevated, he added.

Nitin Jain, Senior Research Analyst at Bonanza, meanwhile said that Putin's visit is expected to revitalize significant defence collaboration between the two countries, particularly aiming to enhance and update India's strategic military abilities.

"As both nations gear up for the 23rd Annual India-Russia Summit, defence relations, especially regarding the acquisition of advanced missile defence systems and fighter jets, will be key subjects of discussion. One of the major highlights in defense is the potential acquisition of additional S-400 air defense missile regiments," he added.

Jain said that a new proposal related to the S-400 air defence missile systems features an important technology transfer agreement, enabling Indian firms like Bharat Dynamics Limited (BDL) to participate in the local assembly and production of essential missile components, which could enhance indigenous manufacturing capabilities.

Russian Sukhoi-30 jets make up the majority of India's 29 fighter squadrons and Moscow has also offered its most advanced fighter, the Su-57, which is likely to figure in this week's talks, Reuters reported.

"Hindustan Aeronautics Limited (HAL) is expected to be a key player due to its specialization in the production and upkeep of aircraft," Jain added.

Which defence stocks are likely to gain?

Defence stocks, especially Hindustan Aeronautics (HAL), Bharat Dynamics (BDL) and Bharat Electronics (BEL), are going to gain as the announcement around co-production of future platforms and existing aircraft picks up, said Shravan Shetty, Managing Director, Primus Partners.

Stocks like Mazagon Dock Shipbuilders can also gain if a collaboration is announced in the naval domain, the analyst added. "The Nifty defence index has gained almost 300% over the last 3 years, riding on the Government's increased domestic procurement focus and the emergence of new export markets. We expect the CAGR to moderate, but the growth to continue," he said.

"Putin's trip is anticipated to speed up defence agreements centered around air defense systems, fighter aircraft, and missile technologies, positioning stocks such as HAL and BDL in the limelight. This summit is vital for India's strategic independence and highlights a plan for improved military self-reliance through partnership with Russia," Jain from Bonanza said.

HAL, BEL, BDL and other PSU defence names are on a multi-year uptrend, but any announcement on joint production, technology transfer or long-term supply agreements can stretch this rally further, said Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara.

The analyst noted that Putin's visit has brought defence stocks back into focus as the market is trying to assess if India-Russia cooperation would translate into fresh orders or upgraded defence frameworks.

"The geopolitical angle is there, but what really matters to investors is order visibility. If the visit strengthens India's procurement pipeline, defence stocks could see another leg of re-rating; if not, they may slip into a consolidation phase," he added.

How are defence stocks performing today?

Defence stocks were trading in the green with marginal gains on December 4. The Nifty India Defence index was up around 0.5 percent to 7,845.55, as seen at 10.35 am. The index has now snapped a two session losing streak.

Unimech Aerospace and Manufacturing shares were the top gainers on the index, rising nearly 4 percent, while Mishra Dhatu Nigam (Midhani) shares gained more than 1 percent. Data Patterns, Paras Defence, Bharat Dynamics (BDL), Bharat Forge, BEML, Bharat Electronics (BEL), Hindustan Aeronautics (HAL) and Cochin Shipyard shares gained nearly 1 percent.

Garden Reach Shipbuilders & Engineers (GRSE) shares were trading flat, while Mazagon Dock Shipbuilders shares were down around 1 percent.

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