India-Pakistan War Buzz: Defence Stocks in Focus
The Indian stock market witnessed a sell-off pressure on the last two sessions of last week, despite showcasing resilience against the India-Pakistan war buzz. However, defence stocks continue to remain a favourite among bulls. Indian defence majors Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), Mazagon Dock Shipbuilders, Apollo Micro Systems, etc., witnessed substantial upside despite weak trends on Dalal Street.
According to stock market experts, these defence stocks are rising due to the distinct investment opportunity created by the rising India-Pakistan war buzz. Comparing HAL, BEL, and Mazagon Dock Shipbuilders shares, they said that each company presents unique opportunities, and investors should consider their individual investment goals and risk tolerance when making a decision. However, they maintained that BEL shares remain stable due to its diversified portfolio and alignment with the government’s defence initiatives.
As per a report by Livemint, Seema Srivastava, Senior Research Analyst at SMC Global Securities, compared the returns prospect among HAL, BEL, and Mazagon Dock Shipbuilders. She said, “HAL has demonstrated robust financial performance, with a 14% increase in consolidated net profit for Q3 FY25, reaching ₹1,440 crore, driven by strong demand from the Indian Ministry of Defence. The company’s revenue from operations rose 15% year-on-year to ₹6,957 crore in the same quarter. HAL’s order book is projected to reach ₹2.5 trillion by FY26, bolstered by significant orders such as 97 Tejas Mk1a aircraft and 156 Light Combat Helicopters, totalling ₹1.3 trillion. Additionally, HAL secured fresh orders worth ₹55,800 crore in FY25, including manufacturing and repair contracts.”
In an interview with Livemint, Seema Srivastava added that BEL, a leader in defence electronics, has a diversified portfolio encompassing radars, communication systems, and electronic warfare equipment. On 1 April 2025, the company announced total order inflows of ₹18,715 crore for FY24-25, falling short of its ₹25,000 crore target. During its Q3 FY25 earnings call, BEL’s management had guided analysts toward achieving this milestone, but actual inflows failed to meet expectations. As of 1 April 2025, BEL’s total order book is around ₹71,650 crore, including the export order book of $359 million. BEL posted a provisional and unaudited turnover of ₹23,000 crore for FY25, reflecting a 16% growth from ₹19,820 crore in the previous year.
The SMC Global Securities expert said that BEL’s strategic position in the defence sector and its focus on indigenisation align with the government’s push for self-reliance in defence manufacturing. The company’s strong order book and consistent performance make it a stable investment choice in defence.
Highlighting the fundamentals of Mazagon Dock Shipbuilders, Seema Srivastava of SMC Global Securities, said, "MDL has shown impressive financial growth, with EBITDA soaring 36.63% YoY to ₹1,104 crore in the quarter ended 31 December 2024. Operating margin improved to 25% in Q3 FY25, compared with 22% registered in Q3 FY24. The shipbuilding company’s total order book stood at ₹34,787 crore as of 31 December 2024, and it is expected to sustain operations for the next 4-5 years. MDL’s involvement in high-profile projects like the P-75 submarines and P-17A frigates positions it strategically in India’s naval defence sector. Furthermore, the government’s announcement of a ₹25,000 crore Maritime Development Fund is expected to bolster the shipbuilding industry, potentially benefiting MDL."
Regarding HAL share price and valuations, Gaurav Goel, Founder and Director at Fynocrat Technologies, said, "HAL, with a market cap of ₹3.01 lakh crore, trades at a P/E ratio 34.8. It delivers excellent efficiency with an ROCE of 38.9% and an ROE of 28.9%. Its sales growth over five years has been 8.71%, but profit growth has been a strong 26.5%, indicating rising margins. HAL offers a solid mix of performance and fair valuation."
Gaurav Goel also shared his views on BEL share price outlook, saying, "BEL, with a market cap of ₹2.30 lakh crore, trades at a higher P/E of 46.2. The company is strong on fundamentals, with a ROCE of 34.6% and ROE of 26.4%. It has delivered an impressive 5-year sales growth of 27.5%, but profit growth is slightly lower at 16%, possibly due to pricing or input costs. It remains a solid, stable player."
On Mazagon Dock Shipbuilders share price, Gaurav Goel said, "Mazagon Dock, the smallest in size at ₹1.18 lakh crore, surprises with the best efficiency metrics—ROCE at 44.2% and ROE at 35.2%. Its 5-year profit growth is 29.4%, while sales have grown by 15.5%. However, its P/E of 42.9 suggests that future growth expectations are already priced in."
On her suggestion to investors looking at defence stocks amid rising drone attacks, Seema Srivastava said, "HAL offers substantial growth prospects with its expansive order book and strong financial performance. MDL presents a compelling case with its impressive revenue growth and strategic position in naval defence projects. BEL remains a stable choice due to its diversified portfolio and alignment with the government’s defence initiatives. Each company presents unique opportunities, and investors should consider their individual investment goals and risk tolerance when deciding."
Gaurav Goel of Fynocrat Technologies suggested, "If you want a long-term, steady compounder, HAL stands out due to its leadership in aviation, improving profitability, and strong export potential. BEL is a good pick with consistent orders and tech expertise if you’re after safe and stable growth with dividends. For short-term momentum plays, especially during war-related news cycles, Mazagon Dock might offer fast gains."
Meanwhile, tensions between India and Pakistan continue to escalate, with loud explosions heard in parts of Jammu and Kashmir early on Saturday. A total of 32 airports have been shut for civilian flight operations, and a complete blackout has been imposed in Punjab’s Jalandhar and in several districts of Jammu & Kashmir.
The International Monetary Fund (IMF) approved the first review of Pakistan’s economic reform program under the Extended Fund Facility (EFF), enabling a disbursement of approximately US $1 billion. India, however, firmly opposed providing funds to a country that continues to sponsor cross-border terrorism.
Disclaimer: The views and recommendations given in this article are those of individual analysts and experts, as reported by Livemint. These do not represent the views of this publication. We advise investors to check with certified experts before making any investment decisions.
