Do you know that India spends 2.9 per cent of its GDP on defence, making it the third-highest military spender in the world after the United States and China? From a strategic standpoint, India’s defence industry is essential. As the nation grows more confident in its defence capabilities, defence stocks in India are on course to see some of their best days. The government has already set a clear goal and is focused on enhancing the nation’s defence infrastructure. The sector is anticipated to grow substantially as a result. By 2025, the Indian government wants to produce $25 billion worth of defence equipment, including $5 billion worth of exports.

What is a Defensive stock?

Due to its minimal correlation with the overall stock market, economy, and protection from shifting economic cycles, a defensive stock is one that constantly increases and creates income for investors in the form of dividend payments, regardless of the state of the economy.

Why Should you Include Defence Stocks in your Portfolio?

Constructing a stock basket is no different from building a portfolio with a variety of assets. Speaking specifically of the defence industry, the following are just a few of the numerous elements that attract investors to businesses in defence stocks in India:

• The “Atma Nirbhar” plan of the government is one area where chances are growing for the sector because the Indian defence system will now solely or mainly depend on domestic suppliers.
• Following the underwhelming Q1FY21 quarter, operating profit levels for these companies are steadily rising. The order books of these businesses are full. Some of these companies, like Bharat Dynamics, have no debt whatsoever.

Best Defence Stocks in India

Hindustan Aeronautics Limited (HAL)

Hindustan Aeronautics Limited (HAL), a government aerospace and defence business in India is based in Bengaluru. HAL is one of the biggest and oldest aerospace and defence firms in the modern era. As of December 23, 1940, it was founded. A five-year investment might raise the price of “HAL” stock to 3441.780 INR.

Also Read: Best Renewable Energy Stocks in India

Hindustan Aeronautics Ltd. (HAL), a state-run aerospace goliath, would manufacture four light utility helicopters (LUHs) in limited series between 2022 and 2033, according to the government. In addition, eight more LUHs would be built by 2023–2024, stated Ajay Bhatt, Minister of State for Defence, in response to a question in the Rajya Sabha on Monday.

Bharat Electronics Limited (BEL)

It primarily manufactures state-of-the-art electrical products for use in ground and aviation applications. BEL is one of the nine PSUs that are a part of the Indian Ministry of Defence. BEL just created a Customer Coordination Cell. The Department of Telecommunications, All India Radio, the Coast Guard (of India, the Maldives, Seychelles, and Sri Lanka), the Army, the Police, the Air Force, and the Navy are a few of BEL’s clients. These people are allowed to use the phone, fax, or internet to contact the Customer Coordination Cell with complaints.

It recently received the Navratna designation from the Indian government. Between 2019 and 2020, BEL expects to raise prices by 12 to 15 per cent. Gun Upgrades, Radar and Missile Systems, Tank Electronics, Communication and Network Centric Systems, Electro Optic Systems, and Electronic Warfare & Avionics Systems will all contribute to the company’s success in the following years.

Bharat Dynamics Limited (BDL)

When Bharat Dynamics Limited was founded on July 16, 1970, the Ministry of Defence of the Government of India functioned as the company’s basic production unit for guided missile systems and related equipment for the Indian Armed Forces.

Bharat Dynamics Limited has been selected by the Integrated Guided Missile Development Programme to create sophisticated, indigenous, and contemporary missiles for the nation (IGMDP). With so many opportunities to incorporate complex manufacturing and program management skills and technology, it allowed BDL the possibility to position itself as the lead production agency and to be actively involved in the program.

Bharat Dynamics Limited has been creating different indigenous underwater and missile weapons with the help of DRDO. Together with the DRDO, BDL also produces products like Light Weight Torpedo and Heavy Weight Torpedo at its facility in Visakhapatnam.

Ashok Leyland

Ashok Leyland is an Indian carmaker with its head  office in Chennai. It is owned by The Hinduja Group. It was founded in 1948 under the name Ashok Motors, but in 1955 it changed its name to Ashok Leyland.

A sales and service network that covers the entirety of India and has close to 3000 additional touch points supports the company’s huge customer base. a global network of more than 550 points of contact that enables the transportation of millions of vehicles. Thanks to technology-enabled customer engagement strategies and knowledge of the distinctive uses of the product line, Ashok Leyland’s sales force is well-prepared to answer customers’ needs.

Since its foundation, Ashok Leyland, which is in charge of managing driver training facilities all over India, has trained more than 8,000,000. The nine locations across India of Ashok Leyland’s service training institutions provide on-the-job training for technicians.

Paras Defence and Space Technologies Limited

The business became Paras FlowForm Engineering Limited on June 16, 2009. The Company received a certificate authorising its official opening for business on July 24, 2009. The company develops, produces, tests, and commissions goods for use in space and defence applications. The Company’s Board of Directors examined and gave the go-ahead for the merger of Concept Shapers and Electronics Private Limited, a subsidiary of the Company, and Mechvac India Limited with Paras Defence and Space Technologies Limited during its meeting on January 12, 2018.

Conclusion

The Indian defence industry saw a CAGR of 3.9% between 2016 and 2022. In addition, developing an Atma Nirbhar Bharat is one of the government’s goals for the Defence Stocks in India. It is safe to say that because the defence industry is receiving more money, defence stocks will always be in the news.