Are We at War? Investing in Defense Amid Global Turmoil

Mansy Chandrachud
In a world marked by conflicts and social unrest spanning over 24 countries, the question arises: Are we at war? This is not a moral assessment but a pragmatic consideration of how these global tensions could impact us. The choice is simple – do we want losses or not?

Over the past month, global markets have experienced a downturn, signaling potential challenges ahead. However, amidst this uncertainty, India’s defense sector stands out as a beacon of resilience. The “Make in India” and “Atmanirbhar Bharat” initiatives have catapulted our defense stocks to outperform even during market declines. While India has historically been among the top five global defense importers, recent efforts have significantly reduced our reliance on external sources.

Beyond the financial market performance, India boasts a substantial portfolio of defense technology patents, making it a key player in the engineering, production, and maintenance of defense equipment. This sector, often overlooked, is a commercial evergreen engaged in activities that resonate with the nation’s engineering prowess.

As we revel in the fact that wars are distant from our shores, the consequences are nevertheless felt on the home front. Key suppliers like Russia have halted the provision of critical components, while China and Russia tighten their grip on the tungsten supply, a crucial element in various industries. Ukraine, a significant player in kinetic bombardment, has depleted its stocks. Fortunately, India’s prudent spending during peacetime has positioned us strategically for procurement, but challenges persist.

In the realm of investments, a defense play in your portfolio can turn it into a shining star, outpacing broader market trends. The question then arises: How do you participate in this growth? There are two primary avenues – the listed top 10 defense companies or private equity. While listed companies still have potential upside, the real growth, exceeding 100%, is expected from unlisted players.

While conventional investment wisdom may suggest defensive strategies like gold or lower PE stocks, it’s fair to argue that someone, somewhere will always find a way to profit. Amid concerns about rising LPG prices, inflation, and the global state of affairs, the key takeaway is this: As long as war remains at a distance from our doorstep, there are opportunities for profitability.

In conclusion, in a world marked by conflict and uncertainty, the defense sector emerges not just as a protector of nations but as a lucrative investment avenue. In a world of 1 world, 2 wars, can we find 5x gains? The answer lies in navigating the complexities of defense investments and seizing the opportunities that arise.

(Mansy Chandrachud is an Investment Banker and a Venture Capitalist with a varied portfolio from fashion-tech, fintech, sports AI, defense and social media. She takes keen interest in world affairs and stock markets. Having been a finance professional with a diverse career, her core expertise lies in personal finance and investments. Insurance and mutual funds with a bird’s eye view of the economy is her success mantra. You can write to her at [email protected])