Defense Stocks Rally Up To 20% In 1 Day; Mazagon Dock, Bharat Forge, Cochin Shipyard Hit New 52-Week Highs

Defense stocks witnessed a bandwagon of bulls on Thursday with shares rallying up to 20%. Leading defense stocks like Mazagon Dock, Cochin Shipyards, Bharat Forge, and Astra Microwave Products even touched new 52-week highs in the day, while others traded with impressive upsides. Defense stocks have continued to witness a strong rally since the time India made a smooth landing of Chandrayaan-3 on the south pole of the lunar. But eventually, defense stocks have been attractive due to strong deal wins in the segment.

Cochin Shipyard recorded the most upside in percentage terms among its counterparts. The stock traded at Rs 1,126 apiece, skyrocketing by Rs 170.85 or 17.89% on BSE. The stock has gained by nearly 20% in the day and even touched a new 52-week high of Rs 1,146 apiece. Year-to-date, Cochin's stock emerged as a multi-bagger by soaring nearly 113%.

Meanwhile, Mazagon Dock Shipbuilders traded at Rs 2,046.50 apiece, up by 7.42% after hitting a new 52-week high of Rs 2,088.85 apiece. Mazagon Dock's shares have been gaining mindblowingly since June month when it saw an upside of over 53%, followed by yet another blockbuster month July where it rallied by over 47%. So far in 2023, the stock advanced by nearly 159%. But since its listing in October 2020, the stock breathtakingly zoomed by 1,142.99% or over 12-fold. From its IPO issue price of Rs 145, the stock has made a massive upside of over 1,340.59% or 14.40-folds till now.

On the performance, Maya Sharan Singh, Director, Lares Algotech said, "The recent surge in defence stocks, with companies like Mazagon Dock Shipbuilders and Cochin Shipyard registering significant gains, is indeed a positive development for the Indian economy. It highlights the growing significance of the Indian defence sector and reflects the unwavering confidence that investors have in its future."

Sharan added, the impressive performance of Mazagon Dock Shipbuilders in June and July, with gains of up to 50 per cent and shares of Cochin Shipyard with a gain of 17 per cent respectively, demonstrates the robustness of these companies. Mazagon Dock Shipbuilders, in particular, has witnessed an astonishing rise of nearly 14 times from its IPO price, signalling the market's belief in the potential of the Indian defence industry.

Further, Astra Microwave Products share price trading at Rs 425.25 apiece, up by 10% after touching a new 52-week high of Rs 430.70 apiece. The stock has gained by over 47% YTD.

Although, Bharat Forge currently traded marginally up to Rs 1,102.40 apiece. The stock touched a new 52-week high of Rs 1,111.10 apiece earlier in the day. YTD, the stock zoomed nearly 25%.

Among other defense stocks, Bharat Electronics traded at Rs 139.70 apiece up by 1.09%, near the day's high of Rs 140.60 apiece -- which was closer to 52-week high of Rs 142.25 apiece.

Also, Bharat Dynamics and Paras Defence and Space Technologies' shares advanced over nearly 6% each on Thursday. While stocks like Hindustan Aeronautics, MTAR Technologies and Premier Explosives jumped in the range of 2-3%.

"We can expect the defence sector to continue playing a pivotal role in driving economic growth and solidifying India's position as a global leader in defence production," Sharan added.

In its latest research note, ICICI Securities said, the Defence Acquisition Council (DAC) has provided Acceptance of Necessity (AoN) to various proposals envisaging investment of Rs 78 billion across the Armed Forces.

The brokerage added, "These encompass all the three services and are aimed at improving survivability, manoeuvrability and combat effectiveness. Among the companies under our coverage, we believe BEL and Astra Microwave could benefit from installation of electronic warfare (EW) suite on MI-17 V5 helicopters. In
addition, AoN has been given for ground-based autonomous system for mechanised infantry and armoured regiments, light machine gun (LMG), bridge-laying tank (BLT), Ruggedized laptops and tablets under Project Shakti and procurement of weapons for MH-60R helicopters. Maintain BUY on BEL (TP: Rs 150) and Astra Microwave (TP: Rs 425)."

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