Shares of Bharat Dynamics Limited declined sharply by over 8% today, extending pressure on defence stocks amid muted near-term sentiment following the Union Budget and weaker quarterly earnings.
The fall in the stock comes as several brokerages flagged the absence of any major policy-level announcements for the defence manufacturing sector in the Union Budget. While the government raised defence capital expenditure, analysts noted that the lack of any “big bang” reforms triggered profit-taking across defence names, including Bharat Dynamics.
Market participants pointed out that expectations of transformative policy measures had built up ahead of the Budget, and the eventual outcome led to disappointment in the near term. This, coupled with softer-than-expected quarterly earnings, added to selling pressure in the stock.
That said, brokerages continue to remain constructive on the medium-term outlook for the defence sector. Analysts believe that the sustained increase in capital spending by the government should continue to support order inflows for key defence public sector undertakings over the coming years.
In the Union Budget, core defence capital expenditure for FY27 has been raised by 18% year-on-year, while the total defence outlay now stands at ₹7.6 lakh crore, marking a 7% increase from the revised estimate. The higher allocation underscores the government’s continued focus on strengthening domestic defence capabilities.
Nomura said the Budget fell short of transformative measures but added that the increase in capital allocation remains a positive for the sector. Meanwhile, Goldman Sachs noted that FY27 defence spending has come in ahead of its estimates.
Goldman Sachs highlighted a sharp rise in allocations within capital procurement, particularly spending on ‘Other Equipment’, which includes missiles, ammunition and radar electronics. This segment has seen a 62% jump to ₹82,200 crore, a development that is seen as favourable for Bharat Dynamics given its strong presence in missile systems.
The brokerage added that Bharat Dynamics is well positioned to benefit from this spending focus, despite near-term volatility in the stock. The company also remains among the top picks of Harshit Kapadia of Elara Securities, reflecting continued confidence in its longer-term growth prospects.
