Best Defence Stocks In India In September 2025: Nibe, Sika, HAL, Bharat Dynamics and More- Based on 5-Yr CAGR

India ranks as the world’s 4th most powerful military, as per the Global Power Index, with a firepower score of 0.0979, where lower scores reflect stronger capability. To enhance defence self-reliance, the government has set a target of US$25 billion in defence production by 2025, including US$5 billion from exports.

Being among the largest defence spenders globally, India allocated ₹6.21 lakh crore (US$74.8 billion) towards defence in the Union Budget 2024–25, making up 13.04% of the total budget. This represents a 4.72% increase over FY 2023–24 and an 18.35% jump from FY 2022–23. In 2022, India spent US$81.4 billion on defence, a 6% YoY rise, maintaining its 4th global position.

In FY 2023–24, India’s defence manufacturing output reached ₹1,27,265 crore (~US$15.37 billion), with public sector undertakings contributing nearly ₹74,434 crore (~US$8.99 billion).

This article presents the leading defence stocks in India as of September 2025, ranked on financial parameters such as 5-year CAGR.

Best Defence Stocks in September 2025 - Based on 5-Yr CAGR

Note: The best defence stocks in September 2025 here are as of August 28, 2025 and are sorted based on the 5Y CAGR. 

Overview of Top Defence Stocks in September 2025

1. Nibe Ltd

Established in 2005, Nibe Ltd operates in both the defence and electric vehicle (EV) industries. It produces precision components for defence use, assembles EV parts, and provides software development solutions.

For Q1FY26 (June 2025), the company reported a revenue of ₹81.19 crore, compared to ₹106.09 crore in the previous quarter (March 2025). Net profit stood at ₹3.89 crore in June 2025, down from ₹6.88 crore in March 2025. 

Key Financials:

• EPS: ₹15.86
• ROE: 10.63%

2. Sika Interplant Systems Ltd

Sika Interplant delivers customised engineering solutions such as electrical modules, MRO services, and advanced components for defence applications.

For Q1FY26 (June 2025), the company posted a revenue of ₹68.01 crore, higher than ₹43.92 crore in the previous quarter (March 2025). Net profit for the quarter stood at ₹10.38 crore, up from ₹8.23 crore in March 2025. 

Key Financials:

• EPS: ₹14.75
• ROE: 28.42%

3. Taneja Aerospace and Aviation Ltd

Since 1994, Taneja Aerospace has been engaged in producing aircraft components and offering aviation services, including MRO and airfield operations.

In Q4FY25 (March 2025), the company recorded a revenue of ₹12.38 crore, compared to ₹8.97 crore in Q3FY25 (December 2024). Net profit rose to ₹6.12 crore in March 2025, up from ₹4.40 crore in December 2024. 

Key Financials:

• EPS: ₹7.09
• ROE: 13.10%

Key Points to Consider Before Investing in Defence Stocks

• Geopolitical Sensitivity

Defence stocks are highly influenced by global events. Border tensions, changes in international relations, or rising conflicts can trigger sharp movements in valuations and investor sentiment.

• Policy & Regulation

The defence industry is tightly regulated, with strict norms around procurement, licensing, and foreign investments. A clear understanding of these frameworks is essential to assess a company’s growth potential and long-term sustainability.

• Impact of Government Spending

India’s increasing defence budget provides strong growth opportunities, particularly for companies engaged in advanced technology, R&D, and exports. Businesses aligned with government priorities are better positioned to benefit.

Risks to Keep in Mind

• Geopolitical Uncertainty – Conflicts or heightened tensions can lead to unpredictable stock performance.
   
• Policy Shifts – Any change in government defence priorities may affect current or future contracts.
   
• Regulatory Hurdles – Complex compliance requirements can slow execution and reduce flexibility.
   
• Reliance on Government Orders – Heavy dependence on state contracts exposes companies to risks of project delays or cancellations.

Future Outlook for India’s Defence Sector

• Government Support – With a massive ₹6 lakh crore push, defence remains a top national priority.
   
• Technology-Driven Growth – AI, autonomous systems, and smart weapon innovations are expected to fuel sector expansion.
   
• Global Collaborations – Increased foreign partnerships and joint ventures are strengthening India’s defence ecosystem and global competitiveness.

Read More: Top Mutual Funds for September 2025 That Delivered Highest Returns in the Last 10 Years.

Conclusion

India’s defence sector promises significant long-term potential but comes with regulatory and geopolitical challenges. Investors should assess each company’s financial strength, preparedness for future opportunities, and risk exposure. Thorough research—or professional guidance—can help navigate this high-growth yet complex sector more effectively.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities are subject to market risks. Read all related documents carefully before investing.