Drone makers and defence-related stocks have seen sharp gains since the day Operation Sindoor was launched in retaliation to Pahalgam terrorist attack.
Since May 7, shares of leading defence and aerospace companies such as IdeaForge Technology, Paras Defence, Zen Technologies, Hindustan Aeronautics, Bharat Electronics and DCM Shriram Industries have posted gains ranging between 8-50 percent.
Vinit Sambre, Head of Equities at DSP Mutual Fund, said during a conversation on CNBC-TV18 that the rally in defence stocks is primarily driven by strong orderbook anticipation and fresh order announcements. However, he added that corporate commentary remains muted due to uncertain macroeconomic environment and that defence execution cycles are typically long.
India's defence ecosystem has matured significantly, marked by a seamless integration of indigenous high-tech systems across various platforms and domains, including drone warfare, layered air defence and electronic warfare. The operational readiness and technological sophistication at display during recent border hostilities with Pakistan have been widely acknowledged, both domestically and internationally.
After the recent run up, several analysts are now of the view that India’s defence stocks appear to be reasonably valued. The established capability and proven effectiveness of indigenous defence products suggest these companies are positioned for continued growth under the ‘new normal’ of the defence calculus, which reflects a measured patience with a doctrine of swift and decisive retribution for terrorist activities.
Manoranjan Sharma, Chief Economist at Infomerics Valuation and Ratings said that while India’s major defence companies are likely to perform well, the magnitude of potential stock appreciation will depend on multiple variables, making projections challenging.
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