Stock markets this year have been very volatile as benchmark BSE Sensex’s returns remained muted but some sector-specific stocks have posted decent gains. As on October 25, 2022, the domestic equity benchmark the BSE Sensex has delivered merely 2.20 per cent gains at 59,543.96 from 58,253.82 on December 31, 2021. However, defence PSU stocks have performed exceptionally well in the same period.
Bharat Dynamics (BDL) share price has increased 154.6 per cent to Rs 994.8 on October 25, 2022 from Rs 390.8 on December 31, 2021. The missile manufacturer PSU, BDL has a market cap of Rs 18,233 crore.
Mazagon Dock Shipbuilders (MDL) the Indian submarine and warship manufacturer with a current market cap of Rs 12,584 crore has gained 123.7 per cent with stock price of Rs 623.95 from Rs 278.90 on December 31, 2021.
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Hindustan Aeronautics (HAL), the stock price of this aircraft manufacturer is up 106.6 per cent this year. HAL, which is also the maker of indigenous fighter aircraft Tejas and helicopters such as Rudra and Dhruv, has a market cap of Rs 83,727 crore.
Cochin Shipyard (CSL) is a shipbuilder it has also produced India’s first indigenous aircraft carrier INS Vikrant. It has a market cap of Rs 7,126 crore, while its stock has increased 52.1 per cent to Rs 541.7 from 356.2 on 31 December 2021.
Bharat Electronics (BEL) is the maker of electronic voting machines, military radars, missiles and semiconductors. BEL has a current market cap of Rs 76,716 crore, with a surge of 50 per cent in the stock price to Rs 105 from Rs 70 on December 31, 2021.
The stellar returns posted by these defence PSUs in the current year are also making investors curious about their future prospects. The government’s focus on the enhancement of domestic capabilities is helping defence companies to reduce the country’s import dependence and emerge as an exporter.
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Market veteran, Gaurang Shah, Senior Vice-President at Geojit Financial Services has said “In the last one-year defence sector related stocks have outperformed and they will continue to deliver good returns. Given the fact that now more and more lists are coming under prohibitory list as far as defence procurement is concerned. Hence companies like BEL, Hindustan Aeronautics, Bharat Dynamics, Mazgaon Docks, Cochin Shipyard are likely to get more orders from the defence ministry. Thereby their earnings will also improve not only domestically but internationally as well. Also domestically, they will satisfy the Indian requirement as far as defence is concerned and globally, some of these companies are likely to export.”
In the recently held defence expo, Defence Minister Rajnath Singh said that India registered defence exports worth Rs 8,000 crore in six months of the current financial year. While Prime Minister Narendra Modi is said to have given the target of achieving $5 billion in defence exports by 2025 to defence manufacturers.
