Mazagon Dock To Garden Reach: Defence Stocks Soar As Council Approves Rs 21,700-Crore Capital Acquisition

Shares of most Indian defence companies surged on Wednesday after the Defence Acquisition Council gave its nod for five capital acquisition proposals for the Indian armed forces, worth over Rs 21,772 crore.

Scrips of Garden Reach Shipbuilders & Engineers to Mazagon Dock Shipbuilders Ltd. rallied after the council gave clearance for procurement of water jet fast attack crafts, fast interceptor craft, electronic warfare suite and next generation radar warning receiver, among others.

The council also cleared procurement of 120 fast interceptor craft or FIC-1 that are capable of performing multiple roles, including escorting high-value units such as aircraft carriers, destroyers, and frigates, submarines for coastal defence.

Furthermore, the council accorded approval for the "overhaul of T-72 and T-90 tanks, BMP- and engines of Sukhoi fighter aircraft which will enhance the service life of these assets", the defence ministry said.

Shares of Garden Reach rose by the most followed by Bharat Dynamics Ltd., Mazagon Dock and Paras Defence And Space, compared to a 0.33% advance in the benchmark NSE Nifty 50 as of 10:14 a.m.

Garden Reach stock rose as much as 6.6% during the day to Rs 1,815 per share on the NSE.

Three out of the four analysts tracking Garden Reach have a 'buy' rating on the stock, and one has a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 23%.

Mazagon Dock stock rose as much as 4.7% during the day to Rs 4,928 apiece on the NSE.

Two out of the five analysts tracking the company have a 'buy' rating on the stock, two suggest a 'hold' and one has a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 16%.

Paras Defence stock rose as much as 4.4% during the day to Rs 1,138 apiece on the NSE.

The one analyst tracking the company has a 'hold' rating on the stock, according to Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 6.7%.