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Defence stocks saw broad-based buying today, pushing the Nifty India Defence index up 2.69 per cent to 7,726.90, led by strong gains in both PSU and private players.

Shipbuilding stocks were among the top performers, with Cochin Shipyard rising 6.23 per cent, Mazagon Dock up 5.63 per cent and GRSE gaining 5.30 per cent, reflecting strong order visibility.

Among private names, MTAR Technologies climbed 5.16 per cent and Solar Industries advanced 5.15 per cent, while BEML added 4.44 per cent and Mishra Dhatu Nigam rose 3.95 per cent. Missile and electronics-focused stocks such as BDL (up 2.82 per cent), Astra Microwave (2.60 per cent) and Data Patterns (1.96 per cent) also traded higher.

Large caps like HAL (1.57 per cent) and BEL (0.92 per cent) saw modest gains.

According to ICICI Direct, the government’s continued focus on import substitution across aircraft, missiles, ships, armour, radars, electronic warfare and avionics is expanding opportunities for domestic defence companies across the value chain. This policy thrust is now translating into faster approvals and higher contract awards.

A key trigger for the rally is the sharp rise in Acceptance of Necessity (AoN) approvals since FY23. ICICI Direct data shows that this has already resulted in a significant jump in contract awarding during FY25 and FY26, improving revenue visibility for defence players.

The brokerage also highlights that procurement timelines have shortened sharply, from nearly 96 weeks earlier to about 24 weeks now, which is improving execution efficiency and reducing working capital stress. Faster decision-making has been a major positive for both PSU and private defence companies.

On the order book front, ICICI Direct points out that the aggregate order backlog of the defence sector stands at 4.9 times trailing twelve-month (TTM) revenues as of September 2025.

Major defence PSUs continue to enjoy strong visibility, with companies like Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), Bharat Electronics (BEL), Mazagon Dock Shipbuilders and Cochin Shipyard sitting on multi-year order pipelines. Select private players such as Solar Industries, Astra Microwave and Data Patterns are also seeing rising defence-led order inflows.

From a growth perspective, ICICI Direct notes that India’s defence budget is targeted at around 2.5 per cent of GDP, with capital outlay expected to reach about 0.8 per cent of GDP by FY30. This is expected to drive domestic defence procurement growth of 18 per cent CAGR, while defence production may grow at 19 per cent CAGR and exports at 21 per cent CAGR during FY25–30.

Looking ahead, ICICI Direct estimates that the total defence order opportunity could be at least Rs 10 lakh crore over the next five years. This opportunity spans large platforms such as fighter aircraft, helicopters, warships, submarines and tanks, as well as missiles, air defence systems, drones, ammunition and counter-drone technologies.