Defence Stocks Rally: Top 3 Key Reasons Behind the Rally in Paras Defence, HAL, BEL

Defence stocks rallied sharply this week as the Nifty Defence Index hit an all-time high, driven by strong Q4 revenue expectations, major order wins, and India’s ₹63,000 crore Rafale Marine jet deal with France, increasing investor confidence.

This week, the Indian defence sector stood out as the Nifty Defence Index reached a new all-time high. The index is currently up by 7.64% on a weekly basis, and on Tuesday, it recorded its highest intraday gain since inception.

On Tuesday, defence sector stocks such as HAL, Bharat Dynamics, BEL, Garden Reach Shipbuilders, Mazagon Dock Shipbuilders, and Paras Defence surged up to 12% during intraday trading. This marked the second consecutive session of strong gains for defence stocks. However, on April 30, 2025, some profit booking was observed at higher levels.

In this article, we will highlight 3 key reasons why defence stocks have rallied so sharply:

1. Anticipation of Strong Q4 Revenues

A key reason behind the recent surge in defence stock prices is the historically strong performance of defence companies in the March quarter each year. Investors are optimistic that this trend will continue, with expectations of robust revenue figures for Q4 FY25.

Data shows that quarter ended March is typically a seasonally strong quarter for defence stocks. 

Source: Screener.in

On Wednesday, Paras Defence and Space Technologies is set to announce its Q4FY25 results. Ahead of the announcement, the stock surged 9.8% intraday to reach a high of ₹1,468.95 on the NSE. It has been on an upward trend for the past three trading sessions, gaining over 30% during this period.

2. India Signs a Deal with France for 26 Rafale Marine Jets

The upward momentum is additionally, the recent ₹63,000 crore agreement signed with France for the procurement of 26 Rafale Marine aircraft, a significant development for the Indian Navy, is also being viewed as a major catalyst for the rally. 

The aircraft, manufactured by French defence firm Dassault Aviation, will be deployed on the Indian Navy’s aircraft carrier, INS Vikrant. As per the contract terms, the delivery of the fighter jets is scheduled to begin roughly five years after the signing. The acquisition also includes ancillary equipment, such as weapon systems and spare parts, from Dassault Aviation. The Defence Ministry had initially granted approval for the deal in July 2023, following detailed evaluations and testing of the aircraft platform.

3. Strong Order Book Status of Defence Companies

Defence sector stocks are back in the spotlight following a series of major order wins. 

• Hindustan Aeronautics has secured orders worth ₹62,700 crore for supplying Light Combat Helicopters to the Indian Army and Air Force on March 28, 2025. As of the current date, the order book stands at ₹ 94,000 crores, with expectations to increase to ₹1,20,000 crores by the end of the fiscal year.
• Bharat Dynamics (BDL) has also reported an impressive order inflow of ₹22,700 crore as of April 1, 2025. 
• Bharat Electronics continues to strengthen its order book, having received orders worth ₹2,803 crore in the current financial year, and a solid pipeline is expected in FY25 as well. The total order book stands at ₹71,100 crores as of January 1, 2025.

Overall, the sector has seen a strong revival in investor interest and fund inflows after a sluggish start to the year.

Disclaimer: The article is for informational purposes only and not investment advice.