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What if you invested Rs 1 lakh in these defence stocks three years ago?

07 June 20236 mins read by Angel One
Zen Technology Ltd: 800% multibagger return in 3 years! Did you seize the opportunity to benefit from this extraordinary growth?
What if you invested Rs 1 lakh in these defence stocks three years ago?
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Defence stocks are the shares of companies involved in the defence industry. These companies primarily focus on manufacturing and supplying products and services related to national defence and security. Defence stocks in India have gained significant attention following Russia’s attack on Ukraine. The invasion has prompted several nations, including India, to increase their defence budgets. This surge in defence spending has led to the outperformance of defence stocks in these countries. 

India currently holds the fourth position among the world’s top defence spenders. It can be inferred that countries worldwide are prioritising defence as evidenced by their increased focus on military expenditures. The geopolitical conflicts between India and its neighbouring countries have been increasing in the last few years and India is continuously expanding its defence budget and this move will help India to keep updating their military system with new technology.

The government aims to enhance its defence manufacturing industry and foster self-reliance through these initiatives to effectively address threats posed by its competitors. The country’s decision is a response to escalating national security concerns, compelling India to prioritize the development of its own defence capabilities.

Furthermore, the “Make in India” initiative has provided a significant boost to domestic companies, encouraging them to invest in capital expenditures and expand their production capacities. This has resulted in favourable business conditions and, ultimately, improved profitability for these companies. This also boosts the export of defence equipment across the globe from India.

India’s defence exports have achieved an unprecedented milestone, surging to Rs 15,920 crore from Rs 12,814 crore in FY23, a remarkable ten-times increase since FY17. India’s defence products are now being exported to over 85 countries, underscoring the nation’s growing global reach in the defence sector.

Year FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 FY 2017
Total Export Value (Crore)       15,920       12,814         8,434         8,115       10,745         4,682         1,521

 Let’s examine the defence stocks in India and their returns during the last three years. Additionally, we will calculate the total value that would have been generated if someone had invested Rs 1 lakh in each of these stocks and held them until today.

Company Name CMP Market Cap (Crore) 3 Year Return Investment Amount (Rs) Investment Value as of Today as per CMP (Rs) Actual Profit (Rs)
Zen Technologies Ltd             413               3,290 875.00%                         1,00,000                                               9,75,000         8,75,000
Premier Explosive Ltd             436                 469 473.00%                         1,00,000                                               5,73,000         4,73,000
Hindustan Aeronautics Ltd         3,492         1,16,771 453.93%                         1,00,000                                               5,53,930         4,53,930
Bharat Dynamics Ltd         1,175           21,543 383.65%                         1,00,000                                               4,83,650         3,83,650
Bharat Electronics Ltd             118           86,402 381.29%                         1,00,000                                               4,81,290         3,81,290
Solar Industries Ltd         3,881           35,155 320.79%                         1,00,000                                               4,20,790         3,20,790
Astra Microwave Ltd             362               3,437 306.00%                         1,00,000                                               4,06,000         3,06,000
Garden Reach Shipbuilders Ltd             507               5,812 228.75%                         1,00,000                                               3,28,750         2,28,750
BEML Ltd         1,530               6,369 194.91%                         1,00,000                                               2,94,910         1,94,910
Bharat Forge Ltd             806           37,660 131.00%                         1,00,000                                               2,31,000         1,31,000
Cochin Shipyard Ltd             559               7,353 130.00%                         1,00,000                                               2,29,960         1,29,960

During the past three years, there has been a remarkable rally in defence stocks, with returns ranging from 130% to 875%. Even when the broader market indices struggled to generate substantial returns during downturns, these stocks outperformed, surpassing the returns of the indices. Notably, an investment of Rs 1 lakh in Zen Technologies alone would have yielded a return of over 800% in just three years. Similarly, investing in any of the aforementioned companies would have resulted in returns exceeding 100% within the same timeframe. 

The defence sector is buzzing at the moment, keep it on your watch list.


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