Shares of Hindustan Aeronautics and Cochin Shipyard were on the rise on Friday after India was getting close to starting work on three major defence projects, which investors expect the firms to benefit from.

What Happened: India is gearing up to initiate three massive defence projects collectively valued at ₹1.4 lakh crore, the Times of India reported.

These strategic initiatives, seen as integral to fortifying India’s military readiness in response to China’s growing capabilities, encompass the acquisition of 97 Tejas Mark-1A fighters, the construction of a second indigenous aircraft carrier (IAC-2), and the procurement of 156 Prachand helicopters.

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The Defence Acquisitions Council, chaired by Defence Minister Rajnath Singh, is poised to deliberate on the “acceptance of necessity (AoN)” for these critical projects at a scheduled meeting on November 30. Subsequent to AoN approval, the projects will undergo tendering and commercial negotiations before being presented to the Cabinet Committee on Security for the final green light.

The acquisition of 97 Tejas Mark-1A fighters, with an estimated cost of around ₹55,000 crore, aims to complement the 83 jets already ordered under a previous contract with Hindustan Aeronautics. This move is pivotal in augmenting the Indian Air Force’s fighter squadrons.

The construction of the second indigenous aircraft carrier (IAC-2) at the Cochin Shipyard, projected at ₹40,000 crore, represents a “repeat order” of the INS Vikrant. This strategic move is driven by the Navy’s operational needs, especially considering that INS Vikrant is expected to be combat-ready only by mid-2024.

Both Hindustan Aeronautics and Cochin Shipyard are likely to benefit from these fresh defence contracts.

Price Action: HAL’s share price was up 4.47% at ₹2,242.25 in late afternoon trade on Friday Cochin Shipyard’s stock was 1.52% in the black at ₹1,123.85.

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