 "Top defence stocks for 2025: Nuvama bets big on BEL, Data Patterns")
Nuvama’s defence picks for 2025: The world feels like a giant chessboard, where nations are the players, each making strategic moves to secure dominance—economically, politically, and militarily, according to domestic brokerage Nuvama Institutional Equities.
Recent times have seen the chessboard brimming with unrest. Conflicts in Europe, wars in the Middle East, and political upheaval in East Asia feature among the top.
Amid this global uncertainty, India is fortifying its position by focusing on strengthening its defence. With an estimated $130 billion in defence spending projected over the next five years, the country is making bold strides to ensure peace through preparedness.
Recognising this shift, analysts at Nuvama Institutional Equities are placing a big bet on India's defence sector for 2025, with Bharat Electronics Limited (BEL) and Data Patterns (India) emerging as their top picks.
“We stay optimistic on India Defence space with key catalysts at play, including a huge localisation push to reduce dependence on disrupted global supply chains and continued modernisation efforts with larger programmes coming ahead of expected timelines. Top picks are BEL and Data Patterns,” said Subhadip Mitra and Vijay Bhasin of Nuvama Institutional Equities, in a note.
On the bourses, BEL and Data Patterns have given solid returns. On a year-to-date (Y-T-D), BEL soared over 59 per cent, while Data Patterns gained 35 per cent. In comparison, BSE Sensex and NSE Nifty underperformed, rising over 8 per cent and 9 per cent, respectively.
So, why is Nuvama betting big on India’s defence sector in 2025?
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Nuvama Institutional Equities analysts liken global geopolitics to a game of chess—where each nation’s move (sanctions, alliances, military action) must be calculated within the constraints of limited resources (budgets) and unpredictable counterplays. In this volatile setup, India is steadily advancing its position, building a stronger and more self-reliant defence ecosystem.
Over the last three decades, India’s defence spending growth rate has averaged ~8 per cent, one of the highest among major economies. This signals a robust growth trajectory, with an estimated ~$130 billion in defence opportunities over the next five years.
Analysts noted that the government’s strategic initiatives are reshaping India’s role from being a mere supplier of sub-systems and components to a global provider of turnkey defence solutions.
However, India’s reliance on foreign partners remains big, with over 50 per cent of imports coming from Russia in the past decade, followed by France, Israel, and South Korea.
Geopolitical disruptions in Europe, the Middle East, and East Asia are further straining global supply chains. This dynamic, analysts believe, is accelerating India’s drive for localisation, opening doors for the private sector to play a more major role in defence production.
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Analysts project 2025 as a turning point for India’s defence industry, with major programmes such as QRSAM, P-75I, LCA Mark 1A, and Pinaka expected to receive orders. The sector’s growth is anticipated to lean towards the Air Force and Navy.
Yet, global supply chain uncertainties, exacerbated by geopolitical instability in Bangladesh, Syria, Korea, Russia-Ukraine, and the Middle East, remain critical variables. With the Trump administration’s return to power, enhanced India-US defence cooperation, analysts opined, could provide a strategic advantage.
In this context, the recent correction in defence stock prices presents a compelling investment opportunity. Analysts favour defence electronics as a standout sub-segment, aligned with the government’s ambitious targets of Rs 50,000 crore in defence exports and Rs 3 trillion in defence production by 2030. The Indian defence growth story, they believe, is just beginning to unfold.