Defence stocks rise after DAC clears ₹1.10 lakh crore procurement proposals; MIDHANI soars 12%, Data Patterns up by 7%

Shares of Indian defence companies soared on Tuesday after the Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, accorded in-principle approval to military acquisition proposals worth about ₹1.10 lakh crore, with around 98% of the procurements set to be sourced from Indian industry.

The development triggered buying across defence counters in early trade on September 8. The Nifty India Defence index gained 2.61% during the session, while Data Patterns soared by 7.71%, Mishra Dhatu Nigam (MIDHANI) by 12% and Hindustan Aeronautics by 4%. BEML, Paras Defence and Space Technologies, Hindustan Aeronautics and other defence stocks rose by 2.65% to 7%.

The approvals, announced by the Ministry of Defence, covered requirements of the Indian Army, Navy and Air Force and included radars, advanced light helicopters, high-mobility vehicles, mine-laying systems, bridge systems, marine gas turbines and electronic warfare equipment.

What did Rajnath Singh-led DAC approve?

The DAC, under the chairmanship of Defence Minister Rajnath Singh, accorded Acceptance of Necessity (AoN) to acquisition proposals estimated at about ₹1,10,000 crore. For the Indian Army, the approvals cover Chemical Biological Radiological and Nuclear (CBRN) reconnaissance vehicles, High Mobility Vehicles, Self-Propelled Mechanical Mine Layers, Advanced Light Helicopters, Trawl Tanks and the Sarvatra Bridge System.

The ministry said the CBRN reconnaissance vehicles will be capable of detecting, identifying, monitoring and marking areas contaminated with CBRN agents. The High Mobility Vehicles are intended to enhance operational capabilities, logistics support and mobility in difficult terrain, while the mine-laying systems are aimed at providing faster and more responsive mine-laying capability.

The Advanced Light Helicopters will be used for missions across different terrains and operational situations for the Army and Air Force, while the Trawl Tanks and Sarvatra Bridge System are intended to support fighting formations during operations in varied terrain.

For the Navy, the DAC approved the procurement of Arudhra Radars as well as the design and development followed by procurement of Marine Gas Turbines. The ministry said the Arudhra Radar would replace existing Air Route Surveillance Radars at various Naval Air Stations, while the marine gas turbine programme is aimed at reducing dependence on foreign vendors.

For the Air Force, the approvals include systems aimed at strengthening the war-fighting capability of fighter aircraft, transport aircraft and helicopters. The DAC also cleared the procurement of Ground-Based Multi-Purpose Jammers and installation of the Defence Forces Secure Access Card system.

What analysts are saying

A report from PL Capital says that with this development, the procurement approvals provide a significant opportunity for domestic defense players and reinforce the government’s continued push toward indigenisation under Atmanirbhar Bharat. "This was further reinforced by the 6th Positive Indigenisation List (PIL), which covers 405 strategically important items, of which around 320 are linked to platforms and systems where HAL, BEL and BEML are key beneficiaries. The overlap between the latest AoN and the PIL across helicopters, radars, mobility and combat systems should further strengthen the long-term opportunity for these companies as import substitution accelerates and a greater share of the defense value chain shifts toward domestic manufacturers," the report said

The brokerage remains positive on long-term growth story of BEL given to the strong order backlog of ₹72,260 crore (2.6x TTM revenue) provides multi-year revenue visibility; healthy pipeline comprising QRSAM, NGC systems, MFRX radars, P75I submarine programs and many others; diversification in non-defense verticals like data centers, cybersecurity, drones and quantum communication to aid non-defense growth; and government focus on product indigenization and import substitution, supporting long-term growth visibility.