Shares of major defence players rose in trade on Wednesday, August 6, after the Defence Acquisition Council (DAC) cleared a series of capital acquisition proposals totaling approximately Rs 67,000 crore. The aim of is to strengthen the operational readiness of the Indian Armed Forces, ranging from the Air Force, Navy, and Army.

In a boost to the Indian Navy, AoNs were approved for the procurement of Compact Autonomous Surface Craft, BrahMos Fire Control Systems and Launchers, and the upgradation of the BARAK-1 Point Defence Missile System.

At 9.20 a.m., Bharat Dynamics, BEL, Astra Microwave Products were trading with gains of up to 1.5 percent, while the Nifty India Defence index was 80 basis points higher.

The Indian Air Force received approval for the procurement of Mountain Radars and upgradation of the SAKSHAM/SPYDER Weapon System. Mountain Radars will strengthen surveillance along mountainous borders, while the upgraded SAKSHAM/SPYDER system, integrated with the Integrated Air Command and Control System, will augment the nation’s air defence framework.

The DAC also gave the green light for the procurement of Medium Altitude Long Endurance (MALE) Remotely Piloted Aircraft (RPAs) for the Army, Navy, and Air Force. These drones, capable of carrying diverse payloads and weaponry, will provide extended-range surveillance and combat capabilities, enabling continuous operational readiness.

Among potential beneficiaries, Bharat Electronics (BEL) is expected to gain from multiple approvals, including the BMP night sights, radar systems, and SPYDER upgrades. BEL currently supplies commander thermal imaging sights for BMP-1/2/2K Infantry Combat Vehicles and T-72 tanks. Bharat Dynamics may benefit from the BARAK-1 upgrade.

L&T and Godrej Aerospace are likely to benefit from BrahMos-related approvals, while private players like Sagar Defence could see gains from the compact surface craft procurement. The MALE drone programme could aid companies like Adani Defence, Tata Advanced Systems, BEL, Hindustan Aeronautics, DRDO’s partner for MALE drones, and L&T. Astra Microwave may also benefit from the radar procurement.

In a note last month, domestic brokerage Nuvama Institutional Equities had said, "Over the past three decades, India’s defence spending growth rate has been among the highest (~8 percent) across global defence superpowers due to import embargoes and growing exports potential."

This portends a ballistic growth runway with an estimated ~$130 billion opportunity over the next five–seven years as the country is progressing well on global defence spending index led by GoI/MoD’s strategic initiatives, which are re-positioning the country on the global defence map from being a sub-systems/components supplier to a one-stop-shop offering complete turnkey solutions.

The brokerage added that Indian defence stocks across the spectrum have re-rated explosively over the past two–three years on back of improved visibility.

Over the past one month, the Nifty India Defence index has crumbled around 11 percent. However, over the six-month timeline, the index has staged a sharp 32 percent rally.