GRSE, Apollo Micro, other defence stocks rally up to 8% as analysts tout structural growth play. Here’s why

Shares of defence companies like Apollo Micro Systems and GRSE surged up to 8% in Friday’s intra-day trade on the National Stock Exchange, lifted by heavy volumes and optimism over government spending, new orders and long-term indigenisation plans for the sector. Analysts say the sector remains among the more structural growth bets in the Indian market despite near-term volatility.

Apollo Micro Systems, Garden Reach Shipbuilders & Engineers (GRSE), Paras Defence and Space Technologies, MTAR Technologies, Mazagon Dock Shipbuilders and Astra Microwave Products advanced between 5% and 8%. BEML, Cochin Shipyard, Bharat Dynamics, Hindustan Aeronautics (HAL), Bharat Electronics, Mishra Dhatu Nigam, Data Patterns (India), Solar Industries and Zen Technologies rose in the range of 2% to 4%.

Apollo Micro hit a record high of Rs 321.70 after an 8% rally. The stock has climbed 17% over the past three sessions following a technology transfer deal struck at DSEI London 2025 between its step-down subsidiary, Apollo Strategic Technologies, and U.S.-based Dynamic Engineering and Design for rocket motor co-development. The collaboration aims to indigenise propulsion systems for multi-barrel rocket launchers, with full-scale production targeted by mid-2026.

MTAR Technologies has jumped 14% in three days after announcing Rs 386 crore of fresh orders in the clean energy fuel cells segment, which it expects to expand further.

Meanwhile, HAL received the third GE-404 engine from the U.S. for its Tejas Mk1A programme, with another due this month. The company expects deliveries under the 99-engine contract with GE to stabilise next year, supporting its ramp-up to 30 jets annually by FY27. HAL shares rose 3% to Rs 4,707 on Friday, extending their September gains to 9%.

Expert views

The defence budget has been pegged at Rs 6.81 trillion for FY 25-26, with 27% earmarked for capital expenditure. India’s defence production is projected to grow from Rs 1.46 trillion in FY24-25 to Rs 3 trillion by 2029, reflecting a compound annual growth rate of 20%, according to Apollo Micro’s annual report.

Amnish Aggarwal, head of research at Prabhudas Lilladher said “Defence seems to be a very structural story to me because we have seen in the past few years how important is to have your local defence industry, how you need to promote them and that is where the government initiatives have been over the past 5 to 10 years and it is now getting reflected in the order books as well as growth of many of these defence companies.”

Aggarwal said that while defence stocks had rallied sharply after mid-May before consolidating, “outlook on them in terms of the order books, in terms of profitability growth that remains pretty decent … in the longer term if you are taking a two- to three-year view, defence stocks seem some of the more structural bets which are available today in the Indian markets.”

Jyotivardhan Jaipuria, founder and managing director at Valentis Advisors, also highlighted defence as a sector with long-term promise. Defence is a “structural story” backed by government push for indigenisation, Jaipuria said, adding that strong order books and steady profitability make defence stocks attractive for long-term investors.

With defence orders swelling and policy tailwinds intact, Friday’s surge underscored how near-term trading momentum is increasingly tied to the sector’s longer-term growth trajectory.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)