Cochin Shipyard Ltd saw its shares rallying 6 per cent in Friday's trade, while defence stocks such as MTAR Technologies Ltd, Paras Defence and Space Technologies Ltd and Data Patterns (India) Ltd declined sharply amid a broader market correction. Despite this, defence stocks have gained up to 35 per cent since US-Iran first announced ceasefire on April 7. 

On Friday, Cochin Shipyard climbed 7.35 per cent to Rs 1,710. With this, the defence PSU ahs climbed 27 per cent since April 7 closing of Rs 1,348.35. MTAR Technologies Ltd fell 3.67 per cent to Rs 5,147.10 in Friday's trade, still up 31 per cent over April 7 level of Rs 3,924.55. Paras Defence and Space Technologies Ltd. Paras Defence and Space Technologies Ltd fell 3.31 per cent to Rs 802.25. This stock is still up 25 per cent from April 7 level of Rs 640.90. 

Garden Reach Shipbuilders & Engineers Ltd (GRSE) shares were trading flat after rising 25 per cent since April 7. Stocks such as Mishra Dhatu Nigam Ltd, Zen Technologies Ltd, BEML Ltd, Solar Industries India Ltd, DCX Systems Ltd, Mazagon Dock Shipbuilders Ltd and Bharat Dynamics Ltd jumped up to 21 per cent. Hindustan Aeronautics Ltd, Astra Microwave Products Ltd and  Bharat Forge Ltd also gained in double-digits. Bharat Electronics Ltd (BEL) is the worst-performing stock, rising a mere 3 per cent.

In a note last week, Choice International expects defence companies may see sustained execution momentum in the March quarter, while incrementally benefiting from an improving demand environment driven by heightened geopolitical tension. The ongoing instability in the West Asia and continued strategic friction across key global corridors, have reinforced the urgency concerning defence preparedness, particularly in air defence systems, precision-guided munitions, surveillance and counter-drone technologies, it said.

"This evolving threat is accelerating procurement plans both, domestically and across export markets, positioning Indian defence companies favourably within the global supply chain. We believe Q4 remains the peak revenue recognition quarter, with companies accelerating deliveries to meet their fiscal targets. Backed by healthy order backlogs and improved supply-chain readiness, we expect a sequential pickup in execution across electronics, missile systems and subsystems," it said.

Revenues for defence companies may appear uneven due to project-linked billing cycles but, underlying execution and backlog conversion remain strong, Choice said.

"On ordering, we expect closure of select advanced-stage deals, though the bigger positive is improving pipeline visibility and rising share of repeat/follow-on orders. The sector is clearly transitioning from order-led triggers to execution depth and programme continuity, which should drive better earnings predictability," it said.

India's defence budget stands at approximately Rs 7.85 lakh crore, of which nearly 30 per cent is allocated to capital acquisition. Of that capital envelope, 70 per cent is mandated under the 'Make in India' framework – a significant and growing domestic procurement commitment. 

"‘Buy & Make’ structure across some platforms indicates sustained localisation tailwinds for the domestic ecosystem over the medium term, despite initial foreign OEM dependence in select segments," B&K Securities said in a March 28 note.