Defence Stocks Rally As DAC Approves Capital Acquisition Proposals Worth Rs 1.45 Tn

Amid the correction in this segment, Defence stocks rallied to greater heights in the Wednesday trading session. The Defence Acquisition Council (DAC), under the chairmanship of Defence Minister Rajnath Singh on Tuesday accorded acceptance of necessity (AoN) for 10 capital acquisition proposals amounting to Rs 1,44,716 crore.

Of the total cost of AoNs, 99 per cent is from indigenous sources under the buy (Indian) and buy (Indian-indigenously designed developed and manufactured) categories, the Ministry of Defence stated.

Mazagon Dock led with gains of more than 6 per cent followed by more than 3 per cent gain in Cochin Shipyard. Garden Reach Shipbuilding stock climbed more than 2 per cent, while Hindustan Aeronautics, Bharat Dynamics, Data Patterns and BEL also traded with significant gains.

“The decision of the 10 capital acquisition proposals will not only boost domestic defence manufacturing but will contribute to the growth of the PSU companies in the defence sector,” highlighted a report by Antique Stock Broking.

The growth of domestic defence manufacturing in the country has picked up significantly over the last few years and is expected to grow further in the future. The share of domestic procurement in India's defence sector has improved from 54 per cent in FY19 to 75 per cent in FY24, added the report. 

For the modernisation of the tank fleet of the Indian Army, the proposal for procurement of future ready combat vehicles (FRCVs) were cleared.

The FRCV will be a futuristic main battle tank with superior mobility, all-terrain ability, multilayered protections, precision and lethal fires over and real-time situational awareness, the release stated.

The AoN was also accorded for procurement of air defence fire control radars, which will detect and track aerial targets and provide firing solutions.

The proposal were also approved for forward repair team which has suitable cross-country mobility for carrying out in-situ repair during mechanised operations.

This equipment is designed and developed by Armoured Vehicles Nigam, and is authorised for both mechanised Infantry Battalion and Armoured Regiment, the Ministry said.

Three AoNs are accorded to enhance the capabilities of the Indian Coast Guard (ICG). The procurement of Dornier-228 aircraft, next generation fast patrol vessels having high operational features in rough weather conditions and next generation offshore patrol vessels with advanced technology and enhanced long-range operations, will enhance the capability of ICG to carry out surveillance, patrolling of the maritime zone, search and rescue and disaster relief operations.