Defence Stocks Gain Up To 3% After MoD Approves 3rd PIL; BEL, Mazagon Hit 52-Week High

Defence pack amid the market mayhem on Monday (August 29, 2022) is trading mixed with some of the counters including BEL and Mazagon Dock hitting fresh 52-week high. The stocks from the pack have gained up to 3% today with HAL gaining 1.8% at day's high, BEL logging gains up to 1.95% and scaling fresh 52-week high. Likewise, Mazagon Dock and Garden Reach both gained up by to more than 3%. Bharat Dynamics and BEML on the other hand were losers so far in trade today.

In continuous pursuit towards self-reliance in defence manufacturing and to minimise imports, Ministry of Defence (MoD) has approved the third Positive Indigenisation List (PIL) of 780 more strategically important line replacement units (LRUs), sub-systems, components with a timeline beyond which they will only be procured from the domestic industry. The list contains items/components used in major defence platforms like aircraft, helicopters, submarines, tanks, missiles, armoured vehicles, etc. With these 780 items, MoD has approved 1238 such items in the last eight to nine months (351 items in first list and 107 items in second list, which were notified in December 2021 and March 2022, respectively).

ICICI Direct-the leading brokerage arm of the ICICI Groups sees the development to be positive for the sector and iterates that "We believe that indigenisation of these components will benefit defence companies in terms of faster execution of major platforms led by procurement of these required items/components from domestic sources. As of now, 2667 such items have already been indigenised (163 items from first list, four items from second list and 2500 items before notifying first list); shows the government commitment towards indigenisation and reducing imports. Out of the 780 items, 360 are for aircraft and helicopters [manufactured by Hindustan Aeronautics (HAL)], 130 items are for submarines (manufactured by Mazagon Dock), 110items for engines of armoured vehicles
(manufactured by BEML) and others for ships, vessels, missiles, missile systems, tanks, radars, etc. Overall, the beneficiary defence companies would be HAL, Bharat Electronics, Bharat Dynamics, Mazagon Dock, Garden Reach and BEML'.