Top 4 stocks supplying critical components to the defence sector
Indian defence sector registered an impressive growth of 12% year-on-year in the financial year ended March 2023. Strong order books led by increased government spending on defence and high exports contributed to this growth. However, this wasn’t the case ten years back.
Although defence companies had good financials, they were run by the government, where profit wasn't the primary motive, and export opportunities were almost nil. Moreover, many companies were plagued with corruption and scams. However, the defence space has undergone many changes in the last few years.
With growing geopolitical tensions, countries increased their defence spending, and India focussed on indigenisation and encouraged defence production in the country. It also focused on exports, which fuelled the growth of the defence companies. Hence, the defence space is considered a good opportunity that investors can capitalise on.
However, it’s not just the pure defence stocks that are benefitting from the current trend of high defence spending. Companies that supply to the defence sector are also prime beneficiaries. With growing order books, the companies that supply components to these defence firms are vital for their growth.
Hence, one can consider these stocks to be a kind of derivative of the main defence companies when scouting for opportunities in the defence space. We have shortlisted four such companies. Take a look.
First on the list is Solar Industries. The company is a leading manufacturer of bulk explosives, packaged explosives and initiating systems, which find use in several industries, including mining, infrastructure, and construction. In 2010, it also ventured into defence and started manufacturing propellants for missiles and
. Read more on livemint.com
