Defence stocks tumble up to 8%; HAL, MTAR, BDL, BEL among top losers

Shares of defence companies came under selling pressure on Thursday, with several stocks sliding sharply in intra-day trade, as investors booked profits after a strong recent rally and reacted to fresh concerns around execution timelines at key defence players.

On the National Stock Exchange (NSE), the Nifty India Defence Index was down 2.7 per cent by 10:32 am, underperforming the benchmark Nifty 50, which was lower by 0.45 per cent. The sectoral index has now fallen 3.7 per cent over the past two trading sessions and is down 5.5 per cent so far in February, even as the Nifty 50 has gained 1.3 per cent during the month.

Among individual stocks, MTAR Technologies dropped as much as 8 per cent to Rs 3,125, weighed down by profit booking. The stock had surged nearly 38 per cent over the previous eight trading sessions until Wednesday, prompting investors to lock in gains.

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Hindustan Aeronautics Ltd (HAL) was another major drag, with the stock plunging up to 6 per cent to Rs 3,952, extending its losses for the second straight day. HAL has now fallen around 12 per cent in just two trading sessions, making it one of the worst performers in the sector this week.

Other defence stocks also traded lower. Shares of Unimech Aerospace and Manufacturing, Bharat Dynamics (BDL), Data Patterns India, Garden Reach Shipbuilders & Engineers, Mazagon Dock Shipbuilders, Dynamatic Technologies, Bharat Electronics (BEL), BEML, Solar Industries and Paras Defence and Space Technologies declined between 2 per cent and 5 per cent in intra-day trade on the NSE.

Why HAL shares fell sharply

The sharp fall in HAL shares follows reports suggesting potential delays in the delivery of indigenous LCA Tejas Mk1A fighter jets. According to market chatter, deliveries could slip beyond the March–May timeline as final integration and certification of key avionics systems, including the electronic warfare suite and the indigenous Uttam AESA radar, are still pending.

Although HAL has already manufactured at least five aircraft, these jets are yet to be cleared for induction by the Indian Air Force (IAF) due to ongoing certification processes. While engine supplies have normalised and the company has ramped up production capacity — including commissioning a second final assembly line at Nashik — actual induction remains contingent on IAF clearances following full performance evaluations.

HAL clarifies on AMCA, LCA deliveries

Responding to reports related to the Advanced Medium Combat Aircraft (AMCA) programme, HAL said it has not received any official communication and therefore cannot comment at this stage. The company reiterated that it has a robust confirmed order book, providing strong revenue visibility and a healthy execution pipeline extending up to 2032.

On the status of LCA Mk1A deliveries, HAL clarified that five aircraft are fully ready for delivery with major contracted capabilities in line with agreed specifications. An additional nine aircraft have already been built and flown, and will be made ready for delivery once engines from GE are received.

Brokerage view and budget backdrop

According to ICICI Securities, execution challenges at HAL have intensified, with delivery guidance cut from 12 aircraft to five, and now facing the risk of no inductions within the earlier timeline. However, the brokerage said that once certifications are completed, deliveries are expected to ramp up. While near-term FY26 deliveries may be impacted, the long-term outlook remains intact, supported by a strong 180-aircraft LCA order book and upcoming programmes such as LCA Mk2, AMCA and helicopters.

Meanwhile, the Union Budget 2026–27 continues to support the defence sector, with capital outlay rising 18 per cent to Rs 2.19 trillion. Aircraft and aero-engines remain the largest capex segment, offering long-term visibility for defence manufacturers, even as near-term stock volatility persists.