Tejas jet crash: Defense stocks came under selling pressure on Monday, February 23, reversing gains seen in the last trading session. The Nifty India Defense index lost 1.09% to hit the day’s low of 8,010 on the National Stock Exchange (NSE) in intraday deals as most index constituents traded in the red.
Shares of Hindustan Aeronautics (HAL) were among the worst affected, with a 4.5% loss. Cyient DLM share price, meanwhile, shed 4.9% and Bharat Dynamics 3.7%.
Mazagon Dock, Midhani, Garden Reach Shipbuilders (GRSE) and Cochin Shipyard share prices were other losers with a 1-2% fall in intraday deals.
Why are HAL shares falling?
The fall in HAL’s share price followed a third accident involving the Tejas jet, prompting investors to reassess execution risk and delivery visibility.
According to a PTI report, Tejas light combat aircraft of the Indian Air Force (IAF) sustained major damage to its airframe after it overshot the runway at a frontline airbase following a suspected brake failure earlier this month.
There was no official word from the IAF on the accident that took place on February 7, the report added.
This marked the third such accident involving Tejas jets since March 2024. The first incident involved a crash near Jaisalmer, followed by an incident in November 2025 when a Tejas crashed during an aerial display at the Dubai show.
The latest accident comes at a time when Tejas maker HAL has missed several deadlines to supply the Mark 1A variant of the aircraft to the IAF, the report added.
Harshal Dasani, Business Head at INVasset PMS, said that while such events rarely alter long-term order pipelines, they tend to create short-term valuation resets, especially when a stock is already trading at elevated multiples.
“HAL has seen a strong rerating over the past cycles on expectations of robust defense indigenisation and large order inflows, but earnings growth must now validate those valuations. Until production scale, margin expansion, and execution consistency visibly strengthen, the stock may remain sensitive to negative headlines despite a structurally strong outlook,” he opined.
Why are other defense stocks on weak footing?
While this incident remained isolated for HAL, other defense stocks also came under pressure despite a sharp rise on Friday amid concerns of the US-Iran war.
Analysts believe today’s price action is tied to sentiment and valuation concerns. Most defense stocks have seen a spectacular rally in the last one year, with 16 of the 18 Nifty India Defense index stocks recording positive returns.
Overall, the defense gauge has surged 50% while MTAR Technologies, with its 160% rise, has emerged as a multibagger stock. Prominent PSU defense stocks like BEL and HAL have risen 18-20% while shipbuilders like Cochin Shipyard and GRSE have gained 85% and 27%, respectively.
Bharat Forge, Data Patterns and Paras Defense have recorded a robust 70-90% upside.
According to Dasani, the defense sector is facing a classic sell-on-rise action as most stocks are priced for perfection after a sharp rally.
“Valuations across the space already discount aggressive order inflows, export growth, and policy support. In such phases, even minor negative news can trigger sector-wide corrections, while positive developments may lead only to short-lived spikes that get sold into,” he said.
Putta Ravi Kumar, Defense Analyst at Choice Institutional Equities, also believes that today’s decline is more sentiment-driven rather than fundamental. The recent incident involving the HAL Tejas has triggered near-term risk aversion, leading to profit booking across defense companies.
However, a single operational incident does not alter the structural demand outlook, execution pipeline, or order visibility for the sector, he said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
