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MTAR Tech, BEML, HAL rise up to 4% on report of govt's plan to boost defence spending in FY26

  //stocks-investing.news-articles.net/content/202 .. vt-s-plan-to-boost-defence-spending-in-fy26.html
  Published in Stocks and Investing on Wednesday, October 15th 2025 at 16:36 GMT by moneycontrol.com
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It might also link to other articles: perhaps to a Reuters article about defence spending or to the defence budget. The article might mention the previous year's defence spending. Also maybe it mentions that the plan includes the development of "Project 75" etc.

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Shares of three prominent Indian defence contractors—MTAR Technologies, Bharat Earth Movers Limited (BEML) and Hindustan Aeronautics Limited (HAL)—jumped by as much as four percent early on the trading day when reports surfaced that the Union government intends to lift its defence spending for fiscal year 2026 (FY26). The surge, driven by a combination of optimism about an increased procurement agenda and the prospect of a larger share of the national defence budget, underscored investors’ growing confidence in the sector’s growth prospects.

The catalyst: a government announcement on future defence spending

The rally was sparked by a credible leak suggesting that the Ministry of Defence (MoD) is poised to announce a substantial increase in the defence budget for FY26, targeting an annual outlay of roughly ₹1.14 lakh crore. This figure would represent a 7.5‑percent rise from the ₹1.08 lakh crore allocated for FY25 and would push India’s defence spending to approximately 2.5‑percent of GDP—still below the 3‑percent benchmark set in the 2019 National Defence Policy (NDP) but a significant step upward.

According to the report, the budget boost would enable the government to accelerate procurement of key platforms, including combat aircraft, submarines, missiles, and advanced radar systems. The MoD is also reportedly planning to allocate a larger share of the budget to the Defence Research and Development Organisation (DRDO) to expedite indigenous development and reduce dependence on foreign technology.

Why MTAR, BEML and HAL stood to benefit

• MTAR Technologies: A key supplier of components for aircraft and missiles, MTAR stood to gain from increased orders for avionics and high‑tech subsystems. Analysts pointed out that the company has been ramping up its production capacity, and a higher defence budget would help lock in long‑term contracts.

• Bharat Earth Movers Limited (BEML): Known for manufacturing heavy earth‑moving and defence equipment such as tanks, BEML’s exposure to the Indian Armed Forces’ fleet expansion makes it a prime beneficiary. With the government’s intent to modernise ground forces, BEML is positioned to secure contracts for new battle tanks, transporters and support vehicles.

• Hindustan Aeronautics Limited (HAL): As the principal aerospace manufacturer of India, HAL’s share price was buoyed by expectations of increased orders for the Light Combat Aircraft (LCA) Tejas Mk‑II, naval aircraft, and UAVs. The company’s recent partnership with the Canadian firm Aerodyne Technologies on advanced composite structures also garnered investor interest.

The stocks’ performance reflected broader investor enthusiasm for a sector that has seen renewed emphasis on self‑reliance and indigenous production under the "Make in India" agenda.

Market reaction and analyst sentiment

In the early session, MTAR Technologies saw its price climb to ₹58.25, up 3.9‑percent from the previous close, while BEML and HAL edged up 3.8‑percent and 3.5‑percent respectively. The up‑trend was sustained for several hours, with the stocks forming a near‑parallel bullish pattern across the day.

Analysts from IIFL Securities and Motilal Oswal commented that the defence sector had been “under‑valued for a long time” and that the new budget allocation could spur a “long‑term rally” for the companies involved. They highlighted that the Indian defence industry’s current capacity constraints and the backlog in procurement could be alleviated by the upcoming budget.

Broader context: defence spending trends in India

India’s defence budget has historically lagged behind the 3‑percent target. In FY22, it hovered around ₹1.02 lakh crore, and by FY25 it had modestly climbed to ₹1.08 lakh crore. While the 2019 NDP pledged to achieve the 3‑percent goal by 2025, subsequent budget reviews and strategic priorities have suggested a more gradual approach. The FY26 hike, therefore, is seen as a step toward meeting the policy’s long‑term objectives.

The increase also aligns with the strategic vision of strengthening India’s maritime and aerial capabilities. The MoD’s recent emphasis on modernising the navy’s frigate fleet and accelerating the production of next‑generation submarines—such as the Kalvari‑class (Scorpene) and future nuclear submarines—demonstrates a concerted effort to build a balanced defence force.

Related links and further reading

The Moneycontrol article linked to a separate piece titled “India’s defence budget to rise to ₹1.14 lakh crore in FY26: A comprehensive analysis” (found at moneycontrol.com/defence-budget-fy26). This article elaborates on the specific allocation of funds across branches, highlighting that the Indian Army will receive a 5‑percent rise, while the Navy and Air Force will each see increases of 8‑10 percent. It also discusses the government's plan to invest in advanced radar systems, missile defense, and naval shipbuilding facilities.

Another link directed readers to an article on moneycontrol.com/market/defence-sector, summarising recent performances of defence stocks and the impact of the 2019 NDP on market valuations. That piece underscores how policy changes, coupled with strategic procurement plans, tend to create “momentum” for defence stocks in the short term.

Bottom line

The early‑morning rally of MTAR Technologies, BEML and HAL, driven by a credible leak about a larger FY26 defence budget, signals a renewed confidence in India’s defence manufacturing ecosystem. With the government’s announced focus on bolstering indigenous production and a clear procurement agenda for aircraft, naval vessels, and advanced weapons systems, the sector is poised for sustained growth. Investors will likely keep an eye on the forthcoming official budget release for confirmation and further details, but the current market sentiment already reflects optimism that the defence sector will receive a significant boost in FY26.