India’s defence companies are defying the trend on an otherwise gloomy day for India’s equity markets. The deteriorating geopolitical situation between Israel and Iran has resulted in a spike in shares of defence businesses.

Shares of Garden Reach Shipbuilders are up 6%, while Zen Technologies and Cochin Shipyard are up 4% to 5%. BEML, Bharat Dynamics, Data Patterns, and Bharat Electronics are among the other defence sector gainers, with increases of up to 3%.

Israel launched planned strikes against Iran’s nuclear program earlier in the day, resulting in several casualties and Iran threatening reprisal. According to reports, Iran has launched up to 100 drones towards Israel.

During the Israel-Palestine conflict, Indian companies experienced supply chain challenges, although the majority of these concerns have already been rectified. Although India’s exports to Israel are not very large, analysts feel that this could result in some export potential.

Between 2019 and 2023, up to 9% of India’s defence imports came from Israel. India is looking to import $128.4 million in guns, ammunition, components, and accessories from Israel in 2024.

In an interview on Friday, Manishi Raychaudhuri of Emmer Capital stated that he has considerable exposure to industrials, including defence firms. However, he stated that defence equities are pricing considerable gains. He noted that given present valuations, one must exercise caution in the industrial domain.

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