Independence Day 2024: Top 5 Defense Stocks to Watch as PM Modi Emphasizes Domestic Manufacturing and Export Growth

India’s defense stocks have experienced significant growth, fueled by the government’s strong focus on boosting domestic defense manufacturing and achieving self-reliance in the sector. In his Independence Day speech, Prime Minister Narendra Modi stressed the importance of making India ‘Atmanirbhar’ (self-reliant) in defense production, aligning with the ‘Viksit Bharat 2047’ campaign that envisions a developed India by 2047, marking the centenary of its independence.

PM Modi highlighted India’s transformation from a heavy reliance on defense imports to becoming a significant exporter of defense equipment. This shift is positioning India as an emerging global defense manufacturing hub.

In 2023-24, India’s defense production achieved its highest-ever growth, reaching ₹1,26,887 crore in FY24, a 16.8% increase over the previous financial year. The Union Budget 2024 allocated ₹6.21 lakh crore for the defense sector for FY25, representing 12.9% of the total budget. This includes a record capital outlay of ₹1.72 lakh crore for the Armed Forces. Allocation for aircraft and aero engines saw a massive 67% YoY increase, while other equipment allocations decreased by 12.8% YoY compared to the revised estimates for FY24.

ICICI Securities, considering the potential order funnel for FY25 and budgetary allocations, believes defense stocks such as Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Astra Microwave Products, and Solar Industries are poised to benefit. These companies have a healthy order pipeline, with managements guiding for 15-25% revenue growth while maintaining margins for FY25. ICICI Securities has a ‘Buy’ rating on Astra Microwave, Azad Engineering, Dynamatic Technologies, Solar Industries, and Zen Technologies. It has an ‘Add’ rating for Hindustan Aeronautics, Bharat Electronics, and Bharat Dynamics shares.

Top Defense Stocks to Buy:

Solar Industries India | Buy | Target Price: ₹13,250 Solar Industries’ share price has rallied over 144% in one year since the last Independence Day, jumping more than 477% in three years. The stock’s YTD returns stand at 51%. ICICI Securities expects the company to secure the order for Pinaka defense systems in the next 3–6 months, with a target price of ₹13,250 apiece, implying a 30.5% upside from Wednesday’s closing price.

Azad Engineering | Buy | Target Price: ₹2,450 Azad Engineering shares, listed on Indian stock exchanges on December 28, 2023, have jumped over 204% from their issue price. The stock made a strong debut with a 37.40% premium at ₹720 apiece on the NSE. Azad Engineering manufactures aerospace components and turbines, supplying to OEMs in the aerospace, defense, energy, and oil and gas industries. ICICI Securities has a target price of ₹2,450 apiece, expecting a 53% upside from its closing price on August 14.

Zen Technologies | Buy | Target Price: ₹2,000 Zen Technologies shares have doubled investors’ money since last Independence Day, delivering over 100% returns. Over the past three years, Zen Technologies’ share price surged by 1,835%. The brokerage firm has a target price of ₹2,000, expecting a 20% upside.

Astra Microwave Products | Buy | Target Price: ₹935 Astra Microwave shares have provided a multibagger return of over 137% in one year since the last Independence Day, rising nearly 400% in three months. ICICI Securities has a target price of ₹935 apiece for this small-cap defense stock.

Dynamatic Technologies | Buy | Target Price: ₹10,250 ICICI Securities has set a target price of ₹10,250 per share for Dynamatic Technologies. This small-cap defense stock has risen 73% in the past 12 months and over 215% in three years. The brokerage firm expects a 51% upside for the stock.