Defence Stocks in India

The defence stocks represent companies involved in the manufacturing of defence equipment such as machines, tools, vehicles, weapons, and technologies used by a country’s military to ensure national security and execute defence operations. These companies supply defence equipment and technology, significantly contributing to the security of the country.

List of Top Defence Stocks in India by Market Cap

The defence sector of India, has seen strong investor interest in the past few years, amid rising government focus on self-reliance and military modernisation. Here is a list of the top defence stocks in India, based on their market capitalisation.

Things to Know Before Investing in Defence Stocks

Government Contracts: Look for companies with a strong track record of securing high-value government contracts to ensure stable revenue and long-term growth.

Global Geopolitical Stability: The defence sector is closely related to international security. Increasing border conflicts and regional tensions can lead to defence spending and new contracts.

Diversification: Invest in companies operating across various defence sub-sectors such as aerospace, weapons systems, technology, etc., to mitigate risk. 

Financial Health: Evaluate a company's financial stability via a strong balance sheet, consistent profits, and manageable debt levels etc.

Innovation: Companies that actively invest in advanced technologies such as drones, cybersecurity, and AI can be positioned for future growth.

Budget Allocation for the Defence Sector

In the Union Budget 2025, India allocated ₹6,81,210 crore towards the total Defence Budget for FY2025-26, a 6.3% increase over the revised estimates of FY2024–25.

Capital Expenditure: Out of the total defence budget, ₹1,80,000 crore allocated for new weapons, aircraft, naval assets, infrastructure, etc.

Revenue Expenditure: ₹3,11,732 crore allocated for operational expenditure such as salaries, training, fuel, repairs, and maintenance of equipment.

Defence Pensions: As much as ₹1,60,795 crore was set aside for the pensions of retired armed forces personnel.

Ministry of Defence (Civil): ₹28,683 crore were allocated to cover administrative costs of the Ministry, including organisations like Defence Accounts Department, Border Roads Organisation (BRO), and Coast Guard.

Advantages of Investing in Defence Stocks

Government Support: The government actively supports the defence sector via various initiatives, including financial (budget) allocation, consistent policies, and promoting indigenous design, development and manufacturing of defence equipment.

Long-Term Contracts & Order Visibility: Companies operating in the defence sector often get long-term contracts from the government, which ensures stable revenues.

High Entry Barriers: Followed by the strong regulatory norms and national security concerns, it's hard to enter the business, so, companies in the sector don’t face much competition.

Make in India Push: The government is supporting indigenous manufacturing, creating an opportunity for the defence companies to grow.

Export and Innovation Growth: Some of the defence companies in India, now also selling their products to other countries, along with investing in new technology, including drones and AI.

Future of Defence Sector in India

The defence sector of India is well-positioned for significant growth led by government support, rising domestic manufacturing, and expanding exports.

Key Growth Drivers:

Domestic Production: India’s defence production has surged significantly following the launch of "Make in India" initiative and has reached to a record ₹1.27 lakh crore in FY 2023-24.

Export Expansion: The defence exports of India ramped up to an all-time high of ₹23,622 crore in FY 2024-25 with registering approximately 12% growth over the previous fiscal year.

Rising Defence Expenditure: The allocation of budget for the defence sector increase 6.3% to ₹6,81,210 crore for FY2025-26, as compared to revised estimates of FY2024–25.

Private Sector Participation: The private sector played a significant role in the defence sector. During FY 2024-25, the private sector contributed 21% to the total defence production in the country.