Defence PSU: Defence companies owned by the government did much better than private companies in the third quarter of the financial year 2025, according to a report by Choice Broking. The report, released on February 24, showed that these government-owned defence companies saw their revenue grow by 25.3% compared to the same time last year. Their profits also went up by 28.7%, even though there were problems with supply chains because of ongoing wars. Their earnings margin, called EBITDA, improved by 140 basis points to 32.4%.
- RatingAstra Microwave Products 610.9098060.42% upside
- BuyApollo Micro Systems 115.6515634.89% upside
- BuyAzad Engineering 1,315.102,15063.49% upside
- BuyBharat Dynamics 1,011.301,19017.67% upside
- HoldBharat Electronics 256.6537044.17% upside
- BuyCentum Electronics 1,286.9584534.34% downside
- SellDCX Systems 258.2031727.77% upside
- HoldData Patterns India 1,640.902,45049.31% upside
- BuyHindustan Aeronautics 3,350.455,00049.23% upside
Indian Army’s Air Defence Gets a Boost with Smart Ammo, Lasers, and Microwave Weapons
(Source: Choice Broking report)
On the other hand, private defence companies faced many challenges. They had delays in their work and issues with supplies, which led to slower revenue growth of just 7.5%. Their earnings margin also dropped by 88.7 basis points. According to Money Controle, choice Broking said, “This quarter showed how strong the government defence companies are in handling global problems, while private companies struggled with inefficiencies and supply chain issues.”
Choice Broking also shared some stock recommendations for the defence sector. One of the stocks, Azad Engineering, has the highest potential to grow, with an expected increase of over 63% from its current price. The brokerage believes the defence sector is set for big growth as it becomes not just a strategic area but also an important part of the economy. The government’s “Atmanirbhar Bharat” initiative, which focuses on making India self-reliant, has helped reduce the need to buy defence equipment from foreign companies. Over the next 5 to 10 years, the government’s support for both government and private defence companies is expected to help the industry grow on its own.
One important thing to watch in the sector is the delivery of General Electric’s F404-IN20 engine to the U.S. This delivery, which was delayed for a long time, is now expected to happen under the current U.S. administration. Choice Broking said, “Once the GE engine issue is resolved, it could bring more orders and help Indian defence companies grow in the long term.”
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However, the sector still faces some challenges. High stock prices and not meeting expectations for new orders or earnings could lead to downgrades. Choice Broking added, “Even though most defence companies have a lot of orders, how well they execute them is still a big concern.”
Despite a tough market, the Nifty India Defence index ended higher on February 24, closing at 5,357.35, up by 0.16%. Shares of Data Patterns were the top performers, rising nearly 5% to close at Rs 1,630 each.
