Garden Reach, Mazagon Dock, Others Surge Up To 19%—Factors Driving The Rally

Garden Reach Shipbuilders, Mazagon Dock, Bharat Dynamics along with others rallied up to 19% on the back of renewed interest in the sector on potential India-US bilateral trade deal and Germany’s spending package.

In Germany, a defence spending in excess of 1% of gross domestic product, roughly €45 billion, will be released from constitutional borrowing restrictions.

Among the multi-faceted relations of India and US, defence ties are seen as an area where there is growing strategic convergence, according to BofA. In India’s Prime Minister Narendra Modi’s visit to Washington DC in February, one of the key points of convergence was India’s potential defence purchases from US.

India’s defence purchase trends show a significant decline in Russia’s role and a growing role for NATO allies US and France. US is steadily becoming India’s key defence partner, along with France.

Since 2008, Russia’s share of India’s defence imports has fallen from 80% to 40% in 2024, while US’s share has grown from less than 2% to 9% in the same period. The biggest jump though is visible for France, which has supplied significant number of Rafale aircraft.

President Donald Trump and Prime Minister Narendra Modi had announced that the two countries would look to negotiate a bilateral trade deal and expectations of cooperation have risen on both sides, noted BofA.

Since then, India’s commerce minister Piyush Goyal has visited US to discuss a potential trade deal, and US commerce secretary Howard Lutnick has also spoken out several times on the trade deal, including on defence purchases.

In the next months, India expects increase its imports from US for its energy, defence, and technology needs, while also providing scope for American companies to collaborate, according to the brokerage.

Back at home, Hindustan Aeronautics Limited is set to achieve a significant milestone in the Light Combat Aircraft Tejas program, as its Nashik plant is ready to roll out the first Tejas MK1A from its newly established third production line.

According the company, this rollout is expected by late April 2025, slightly delayed from the originally anticipated timeline of March 2025.

The development underscores HAL's ongoing efforts to enhance production capacity and meet the Indian Air Force's demands for advanced indigenous fighter jets.

Garden Reach leads the pack, trading nearly 20% higher against a 0.32% advance in the benchmark Nifty 50.

Closely following Garden Reach is Idea Forge, recording nearly 16% rise in trade to Rs 389.2 apiece.

Mazagon Dock was trading nearly 10% higher at Rs 2,595 apiece as of 1:58 p.m. Cochin Shipyard was trading higher by 8.20% at Rs 1,450 apiece on NSE.

HAL also saw 4.5% gains in trade, rising to Rs 3,772 per share on Wednesday.