Top 10 Defence Stocks in India for 2025

Like others, defence stocks in India have set an example that the Indian stock market offers robust opportunities for investors to build their wealth. We are in fourth place in terms of defence spending worldwide. Last year, India recorded a 32.5% increase in its defence exports due to rising government capital spending and initiatives. 

The defence sector is an integral part of every economy. As Prime Minister Shri Narendra Modi said, “A nation with a strong defence industry will not only be more secure. It will also reap rich economic benefits—it can boost investment, expand manufacturing, support enterprises, raise the technology level and increase economic growth in the country.” This encouraged most investors to consider the potential returns that defence stocks delivered over the past few decades. 

What are Defence Stocks in India?

Defence stocks in India represent the shares and equities of companies that play a vital role in enhancing national security. These organisations receive the ultimate benefits of government contracts and show their resilience even in economic slowdowns. Investing in such stocks could often allow individuals to participate in stable and growing sectors. 

Most people still need clarification on which stocks to choose. In the table below, we’ve mentioned some of the best defence stocks to consider in 2025 to generate higher returns from the stock market. We’ve also explored how to invest in top defence stocks in India. Keep scrolling to explore. 

List of Top 10 Defence Stocks in India

*Data is updated as of 28th November 2024

Factors to Consider When Investing in Defence Stocks in India

Investing in top defence stocks in India could be a stepping stone to building wealth. However, there are still some factors investors must consider before investing. These include. 

• Budget Allocation: Assess the government’s capital spending on the Indian defence sector to get an idea of its growth potential. For example, as per the Budget 2023-24, the government increased the allocated amount from 6.7% to INR 1,62,600 crores. Thus, investors should consider this increment a significant factor that could impact the performance of defence companies.  
• Government Initiatives: The Indian defence sector is highly dependent on government policies and procedures. Government contracts help companies grow in the competitive business environment. Monitor government initiatives and strategies to analyse the future trends of top defence stocks in India. These may include DIC (Defence Investor Cell), iDEX (Innovations for Defence Excellence), DTIS (Defence Testing Infrastructure Scheme), and more. 
• Geopolitical Environment: Top defence stocks in India are sensitive to the geopolitical environment. Thus, it is important to consider geopolitical risks and development as a priority when investing in the best defence stocks. Closely monitor the conflicts, border wars, government actions, and more to assess the stock trends in advance. 

• Company’s Financials: When we think about investing in stocks, some factors comes to our mind. These include revenue, profitability, cash flow, and capital expenditures. When selecting from top defence stocks in India, assess the company’s financial position and ensure that the firm has enough cash flow to mitigate any uncertainty or leverage tech advances in the coming years. 
• Technological Innovations: In this rapidly evolving technological era, the Indian defence sector is encountering new technologies. However, defence companies in India require high capital investment to integrate these technologies into their structures. Focus on the best defence stocks in India that invest heavily in research and development to adopt tech advances on time. 

Top Defence Stocks Based on 1-Year Returns

*Data is updated as of 28th November 2024

Dividend Yield in Best Defence Stocks in India 2024

*Data is updated as of 28th November 2024

Why Should You Invest in Top Defence Stocks in India?

Everyone wants to invest in a stable and growing industry, and the Indian defence sector could be the best option. The ultimate support of government policies and initiatives backs top defence stocks in India. Investors could take advantage of government support to earn regular dividend income or steady capital growth. 

Research on the best defence stocks in India could help investors make informed investment decisions. All need to make a diversified portfolio. And these stocks could also cut off your losses in other non-resilient sectors due to market volatility or economic downturns. Thus, investing in defence stocks becomes a potential opportunity because of the exhibit of volatility to economic uncertainties. 

Risks Associated With Defence Stocks

The best defence stocks in India often face downfall due to risks associated with the stock market and industry. However, it is essential to identify and assess such risks to mitigate them partially in the investment journey. Here are some risks associated with defence stocks in India. 

1. High Capital Expenditure: Integrating technological advancements often requires defence companies in India to spend more of their capital. The ineffective cash flow of the companies may create hurdles for them to adopt these technologies, which might impact their competitiveness. Ensure that selected companies have effective cash flow to manage such hurdles in the upcoming years. 
2. Geopolitical Risks: The Indian defence sector is highly sensitive to the geopolitical environment. Any dispute or conflict can significantly impact the top defence stocks in India. These impacts can be in any form, such as disruption in the distribution network, customer base, or change in trade regulations. Consider the defence stocks highly resilient to geopolitical risks to eliminate this risk from your investment journey. 
3. Regulatory Changes: Any kind of non-compliance with regulatory requirements might incur high penalties or fines for defence companies in India. To mitigate the risk of any regulatory change, try investing in top defence stocks in India having a compelling track record of complying with the rules and regulations imposed by the legal authorities. 
4. Budget Cuts: In FY24-25, the government has increased its budget allocation by 8.6% to stimulate defence spending across the country. This increase in the allocated amount might foster the growth of defence companies in India. Likewise, budget cuts could negatively impact organisations. Stay informed about any changes the government is going to make in the defence budget to secure your returns from the best defence stocks in India. 

Let’s Wrap

Top defence stocks in India can deliver unexpected returns to investors. Meanwhile, one can benefit from the high dividend yield policies of defence companies in India. These stocks are resilient to economic slowdowns, but they can face the impact of volatility in a geopolitical environment. To invest safely in the Indian defence sector, consider the factors that affect it and the best stock advisory services. Use the Univest app to get the best stock recommendations to diversify your portfolio. 

FAQs Top 10 Defence Stocks in India

1. What are defence stocks?

Ans. Defence stocks in India are the equities of business enterprises engaged in influencing the country’s national security. These stocks are mainly resilient to different types of economic downturns. From catering to the needs of the Indian armed forces to exporting equipment to the global market, defence companies have a crucial role. 

2. Which defence companies are listed on stock exchanges?

Ans. Here is the list of top 10 defence stocks in India listed on the NSE or BSE. 

• Bharat Electronics Ltd. (NSE: BEL))
• Hindustan Aeronautics Ltd. (NSE: HAL)
• Cochin Shipyard Ltd. (NSE: COCHINSHIP)
• BEML Ltd. (NSE: BEML)
• Solar Industries India Ltd. (NSE: SOLARINDS)
• Zen Technologies Ltd. (NSE: ZENTEC)
• Data Patterns (India) Ltd. (NSE: DATAPATTNS)
• Paras Defence and Space Technologies Ltd. (NSE: PARAS)
• Mozagon Dock Shipbuilders Ltd. (NSE: MAZDOCK)

3. How do you invest in defence stocks?

Ans. To invest in top defence stocks in India, you should consider the following steps. 

• Identify the investment goals and path to achieve them optimally. 
• Research on the top 10 defence stocks in India and their past performance in terms of net profit, revenue, cash flow, and debt. 
• Use a stock advisory platform to get the best recommendations on high-potential stocks. 
• Select the stock and place a buy order to invest in. 
• Monitor your investment in the portfolio section and wait for the right time to book profit. 

4. Is it good to invest in defence stocks?

Ans. Top defence stocks in India not only appreciate the capital but also provide investors with several benefits of the Indian defence sector. These include resilient nature, stable dividend income, growth potential, and continuous government support. It makes investing in defence stocks a popular choice among investors.