BEL, HAL, BDL, Zen Tech, Paras Defence, Data Patterns: Why Defence Stocks Rallied After DAC's Rs 52,000 Crore?

Major defence stocks rallied on July 6th, after the Defence Acquisition Council (DAC) approved acquisition proposals up to Rs 52,000 crore for Defence Forces. Zen Technologies emerged as top performer, while Paras Defence and Data Patterns also rose sharply. Defence PSU giants like Hindustan Aeronautics (HAL), Bharat Electronics (BEL) and Bharat Dynamics (BDL) also gained. As per experts, companies like BEL and BDL are the clearest winners of the new defence boost.

Defence Stocks Rally

The Nifty India Defence Index surged by nearly 1% to close around 9,641.30. Zen Tech led the gainers list with nearly 7% upside, followed by Dynamatic Technologies, which surged by 6%. Stocks like Paras Defence, Data Patterns and Midhani rallied by 5%, 2.33% and 1.90% after the closing bell.

Among the biggest contributors to the index were also BEL and BDL shares, which surged by 1.7% and 1.5%. Mazagon Dock Shipbuilders rose by 1.2%, while GRSE, HAL, and Solar Industries advanced by a marginal to 1% upside.

"We believe the Army's procurement pipeline accounts for 65-70% of the total outlay (Rs 340-360 billion) - covering systems such as AKASH TARANG, MRSAM, V-SHORADS, MPATGM, active protection systems and loitering munitions. This reflects a clear shift towards a more agile and technology-driven defence posture," said analysts at Choice Institutional Equities.

The analysts pointed out that the focus on building a multilayered security architecture strengthens both threat detection and response capabilities while also aligning with evolving warfare dynamics such as drones and electronic warfare. At the same time, they believe selective allocations to the Navy and Air Force suggest a balanced capital deployment strategy, supporting immediate operational readiness alongside long-term capability creation.

DAC's Rs 52,000 Crore Defence Push

Last week after market hours of July 3rd, DAC approved acquisition proposals for the Defence Forces at an estimated cost of about Rs 52,000 crore.

For the Indian Army, under the new development, approval was granted for the procurement of Anti-Unmanned Aerial Vehicles (UAV) Electronic Warfare System 'AKASH TARANG', Man Portable Anti-Tank Guided Missile (MPATGM) Systems, Medium Range Surface-to-Air Missile (MRSAM) Weapon System, Very Short Range Air Defence System (V-SHORADS), Active Protection System for Tanks and Jet Based Kamikaze Drone System.

Meanwhile, for Indian Navy, DAC okayed projects like Multi Influence Ground Mine (MIGM), Naval Shipborne Unmanned Aerial System (NSUAS) and the setting-up of Land Based Testing Facility (LBTF) for Electric Propulsion System.

For the Indian Air Force, the approval was accorded for the procurement of Fixed-Wing Based High Altitude Pseudo Satellite (FW-HAPS) and other proposals. The FW-HAPS will carry out persistent Intelligence, Surveillance & Reconnaissance, telecommunication and remote sensing for the Indian Air Force.

How Defence Companies Will Benefit?

"We see the opportunity as largely concentrated in air defence and missile systems, which could account for a significant portion of the outlay. In this context, Bharat Electronics Ltd emerges as a core beneficiary, likely to capture significant share of over Rs 200 billion, given its strong positioning in radars, electronic warfare and system integration, enabling participation across multiple platforms," said analysts at Choice in their note.

Not just BEL, they believe that BDL is well-positioned to emerge as a key beneficiary of the missile-heavy procurement mix, particularly across MRSAM, V-SHORADS and MPATGM programs.

"We estimate BDL's addressable opportunity within this cycle at Rs 120-180 billion, forming a meaningful share of the broader Rs 250-300 billion air defence and missile opportunity. While the exact conversion will depend on contract structuring and localization dynamics, we believe the pipeline offers strong medium-term visibility, with order inflows likely to scale up over FY27-FY28 as approvals convert into executable contracts," analysts' notes said.

Accordingly, Choice's analysts are positive on BEL as a consistent compounder and BDL as a direct play on missile-led growth, while drones and electronic warfare add further long-term upside.

Which Defence Stocks To Buy?

The recommendations are of Choice Institutional Equities.

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