While large-cap defence stocks have struggled to gain traction in August, a few select small-cap names have delivered strong returns of up to 40%, partially offsetting the sector’s overall weakness amid concerns over stretched valuations.
Among the top performers was Apollo Micro Systems, which surged from ₹173 to ₹243, posting a massive gain of 40%, its second biggest monthly gain in 2025, following a 60% jump in May. Demand for the stock picked up after the company reported stellar figures for the June quarter, with consolidated net profit soaring to ₹18.51 crore, up 115% from ₹8.43 crore in the same quarter last year, driven by improved operational efficiency.
The company has consistently reported steady growth in net profit in recent quarters. The latest rally has lifted the stock’s gains to 110% so far in 2025.
Rossell Techsys was another small-cap defence stock that surged 21% in the ongoing month and even hit a fresh all-time high of ₹735 apiece. Likewise, C2C Advanced Systems and Jaykay Enterprises rallied 18% and 13.4%, respectively.
After remaining under bear hands for two consecutive months, Astra Microwave Products made a comeback in August, rebounding 12% so far to ₹1,072.90. Between March and May, the stock had witnessed a one-way rally, climbing 80% before facing profit booking.
The rebound followed the company’s healthy performance in Q1FY26, which also prompted brokerages to stay positive, with ICICI Securities re-initiating coverage on the stock with a ‘buy’ rating and a target price of ₹1,190 apiece.
The brokerage added that AMP’s opportunity size is expected to be in the range of ₹240-250 billion over FY28, which should drive earnings for years to come.
IdeaForge Technology also staged a strong comeback, with shares recovering 11.4% in August after losing 25% of their value in July. The stock has been flipping between gains and losses in recent months but has largely remained in negative territory.
If the stock sustains its August momentum and closes with a gain above 10%, it will mark its first double-digit monthly rise since June 2024 and only the third since its listing in July 2023.
Defence sector outlook remains bright
Though large-cap defence stocks have cooled in recent months, the sector’s outlook remains strong. The government’s commitment to domestically producing all defence-related equipment as a part of Atmanirbharta (self-reliance) in defence has significantly boosted order books of defence majors, and analysts expect continued inflows as India looks to strengthen its borders.
In FY25, India achieved a major milestone, with annual defence production reaching an all-time high of ₹1.5 lakh crore, an 18% rise from the previous year’s ₹1.27 lakh crore and a remarkable 90% surge compared to FY20’s ₹79,071 crore.
India’s defence products are also making global inroads, with exports hitting a record ₹23,622 crore in FY25. The government now targets ₹50,000 crore in annual exports by 2029, further expanding the country’s global footprint.
During Operation Sindoor, India showcased the strength of its indigenous defence systems by intercepting drones and missiles launched by Pakistan, while orders for the BrahMos missile surged after its pivotal role in striking Pakistani military infrastructure, including air bases, cantonments, and terror camps.
Reinforcing this push, Prime Minister Narendra Modi announced ‘Mission Sudarshan Chakra’ during his Independence Day address and renewed the call for indigenous jet engine development.