Defence Stocks React to US-Iran Tensions: HAL, BDL, GRSE, and Mazagon Dock Shipbuilders for Investment Consideration

Geopolitical Tensions Fuel Defence Stocks Amid US-Iran War

It has been more than five weeks since the beginning of the Israel-US-Iran war, with no signs of de-escalation in sight. The ongoing conflict has heightened geopolitical tensions, with Russia intensifying attacks on Ukraine and China potentially eyeing Taiwan. In this backdrop, the defence theme is expected to perform well in the medium to long term.

According to market experts, despite sideways-to-negative trends on Dalal Street, defence is one segment expected to grow in the short to medium term. Indian defence companies, including HAL (Hindustan Aeronautics Limited) and BEL (Bharat Electronics Limited), are expected to gain from the buzz around the defence theme. The Indian government has executed several defence deals with Germany, France, the EU, and Israel, which are expected to have a positive impact on the defence theme on Dalal Street.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Highlighting the positive triggers for the Indian defence stocks, Seema Srivastava, Senior Research Analyst at SMC Global Securities, pointed out that India's defence sector is buzzing with recent deals with Germany, France, the EU, and Israel, boosting the country's defence capabilities. The deals include India's plan to acquire 22 Apache attack helicopters and 15 Chinook heavy-lift helicopters from Boeing, as well as a deal with France for 26 Rafale fighter jets. These agreements are expected to drive growth in India's defence sector, with a focus on indigenous production and export opportunities.

The ongoing US-Iran war has also led to increased tensions in the Middle East, allowing Russia to intensify its attacks on Ukraine. Sandeep Pandey, Co-founder of Basav Capital, noted that geopolitical tensions in the Middle East have entered the sixth week, with no apparent truce in sight. Amid rising geopolitical tension, Pandey advised long-term investors to add defence stocks to their portfolio, citing defence companies that deal in drones, missiles, and aerospace equipment as better placed than their peers.

Regarding stocks to buy amid rising geopolitical tensions, Seema Srivastava of SMC Global Securities recommended HAL and BEL as well-positioned to benefit from this growth, given their strong order books and diversified portfolios. HAL's revenue grew 10.7% YoY, with PAT rising 29.6% YoY, driven by robust execution and order book visibility. BEL's revenue surged 23.7% YoY, with PAT up 20.8% YoY, backed by a diversified portfolio across radars, communication systems, and electronic warfare.

Sandeep Pandey of Basav Capital also suggested that investors may look at HAL, GRSE, Data Pattern, Zen Technologies, and MTAR Technologies shares for the medium to long term. India's defence budget is expected to increase by 15.20% to ₹7.85 lakh crore in FY26-27, benefiting defence stocks. With a strong focus on indigenous production and export opportunities, HAL and BEL are attractive investment options, given their robust order books and diversified portfolios.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline