In 20 Years, Some Indian Defence Stocks Could Compare To US Peers: Equity Intelligence’s Porinju Veliyath

In the next 20 years, some Indian defence stocks could reach a level comparable to their US peers, according to Porinju Veliyath, founder and chief executive officer of Equity Intelligence India. However, in the short term, some of these companies have “gone up too much, beyond a justifiable limit".

“There could be some temporary big movement in defence stocks. However, we need to look beyond the short term. Over the next five, 10, or 20 years, some of these defence stocks could grow substantially, potentially reaching levels comparable to their US peers. That said, many of these companies have gone up too much and beyond a justifiable limit,” he told NDTV Profit.

The rally in defence stocks peaked around September or October 2024, followed by significant corrections in overheated stocks, he said. While maintaining a “long-term trajectory of growth for Indian defence stocks”, the ace investors said that these stocks have had a “dream journey, dream movement” since the lows faced during the Covid-19 pandemic.

When it comes to taking an investment call related to defence stocks, he acknowledged that it is not an easy decision. “Some stocks that have corrected by 50% or more might still offer value. I've been looking at smaller companies, but I won't name specifics. Investors need to be cautious about valuations and the quality of these companies,” he said.

In the five-year bull run of defence stocks, the stories and prospects of some mid-cap companies have been exaggerated, according to the CEO. “Market dynamics, sometimes influenced by Western interests, can play a role. But I'm not pointing fingers,” he said.

Despite market volatility and corrections over the past six months, India remains a “paradise for cherry-picking stocks”, according to Veliyath. However, he urged investors to focus on companies with strong growth prospects over the next two to 10 years, warning that earnings challenges persist in certain pockets. “Look for industries and companies where things are in favour, not just for a quarter or month but for the long term,” he advised.

Regarding US President Donald Trump's announcement of plans to reduce the price of medicines in the US, he said it is too early to gauge the impact of the decision on Indian pharmaceutical companies. “There could be some winners, too. Some of the Indian pharma companies may have to bring down their prices as well. I am neither bullish nor bearish because of Trump's announcement,” he said.

In the backdrop of India's Operation Sindoor, he said India has been a “clear winner” and that it has sent a strong message to adversaries and earned global praise. 

He highlighted the contribution of schemes such as 'Make in India', without which India would have been “in a bad shape today”. India's indigenous defence production can make it a "big exporter of defence equipment globally", he said.

Veliyath praised the government's “fantastic professionalism” and diplomatic efforts, citing the recently concluded Free Trade Agreement, with the UK and ongoing negotiations with the US, EU, Chile, Australia, Japan, and others. These, he argued, are bolstering India's economic stability and growth amid global turbulence.