BEL, HAL, BDL; Defence Stocks Gain By 17-121% In 3 Mnths; Why NATO's Defence Hike Is New Opportunity For India

Indian defence companies had quite a roller coaster ride in the past three months. From witnessing war-like tensions at its home ground to witnessing a new wave of geopolitical crises globally, including in the Middle East, to trade tariff jitters. But amidst this, the Indian defence companies have accelerated, giving at least 121% returns in Q1 of FY26. The next big opportunity could be NATO's latest budget hike, which came in sharper than expected thanks to US President Donald Trump.

Indian Defence Stocks:

Data from Trendlyne showed that as many as 25 defence stocks rallied between 17% to 121% during the past three months. The first quarter of FY26 will end on June 30.

According to the data, the top gainer is Sika Interplant which skyrocketed by 121% on a quarter-on-quarter basis. It is followed by C2C Advanced Systems zoomed by 111.3%.

Meanwhile, GRSE and Paras Defence gained by around 80% and 70%. Further, IdeaForge zoomed by a little over 69%, followed by Data Patterns and TechERA Engineering that rallied by 67% and 64%. NIBE surged nearly 61%.

Moreover, stocks LIKE Mishra Dhatu Nigam gained over 59%, Apollo Micro Systems soared over 57%, and Astra Microwave advanced nearly 56%. CFF Fluid Control and Bharat Dynamics also climbed by 50% and 47.5%. Also, Rossell Techsys surged over 41%.

Bharat Electronics (BEL) and Hindustan Aeronautics (HAL), the largest defence companies of India, gained by 38% and 17% respectively. Stocks like Krishna Defence & Allied jumped 32%, while Zen Technologies was up 30%, Tanej Aerospace and Rossel zoomed by 28% each.

Additionally, MTAR Technologies, DroneAcharya Aerial, and Mazagon Dock Shipbuilders gained by 20% to 25%. DCX Systems and Jaykay Enterprises were up by 19% each.

How Does India Benefit From NATO's Defence Budget Hike?

As per Angel One website, this massive commitment translates into hundreds of billions of dollars in additional defence outlay annually. For India's defence sector, which is increasingly self-reliant, this presents a significant demand that it is well-positioned to meet.

Angel One's note said, India offers a distinct competitive advantage in the global defence market. This includes its cost-effective production, large manufacturing capacity, and a rapidly maturing technological base. With a substantial skilled workforce and expanding industrial infrastructure, India possesses the scalability that many European countries currently lack in their defence sectors.

"Defence- stocks are likely to be in focus, as India's strengthening manufacturing ties with Europe, backed by NATO's rising defence spend, present a significant export opportunity. The government has set an ambitious target of Rs 50,000 crore in defence exports by 2029," said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services.

NATO Defence Budget Hike:

The White House last week said, in a defining moment for global security, President Donald J. Trump achieved a monumental victory for the United States and its allies, brokering an historic deal to dramatically increase defense contributions across the NATO alliance - and marking a new era of shared responsibility and strength against global threats.

During the summit 2025, NATO allies made a commitment to investing 5% of Gross Domestic Product (GDP) annually on core defence requirements and defence- and security-related spending by 2035. They will allocate at least 3.5% of GDP annually based on the agreed definition of NATO defence expenditure by 2035 to resource core defence requirements and to meet the NATO Capability Targets.

Allies agreed to submit annual plans showing a credible, incremental path to reach this goal. They will account for up to 1.5% of GDP annually to inter alia protect critical infrastructure, defend networks, ensure civil preparedness and resilience, innovate, and strengthen the defence industrial base, as per NATO's website.

World leaders congratulated Trump on his big win during the NATO summit.

Finnish President Alexander Stubb: "We're witnessing the birth of a new NATO ... This is a big win, I think, for both President Trump and I think it's also a big win for Europe."

Polish President Andrzej Duda: "Without the support and the leadership of Donald Trump, it would be impossible."

European Union foreign policy chief Kaja Kallas: "Allies seem to be united. I think the understanding is everybody needs to do more for defense because we are living in very turbulent times."

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