Nifty 100 Index

Securities(stocks &amp; equities) which aims to track the performance of portfolio of stocks that broadly represent the Defence theme. Stocks forming part of eligible basic industries or those which obtain at least 10% of revenues from the defence industry are eligible to be included in the Smallcase

India’s defence sector is at the cusp of a multi-decade growth cycle, driven by rising budgets, indigenization (Atmanirbhar Bharat), and increasing geopolitical tensions. With over 1.7 lakh crore earmarked for capital outlay in FY26, the focus is shifting towards indigenous manufacturing of aircraft, warships, missiles, drones, and defence electronics. Companies enjoy long order books, strong cash flows, and high entry barriers. Meanwhile, emerging players are tapping niche, high-margin opportunities. Export opportunities and global partnerships further strengthen the sector’s long-term compounding potential.

Constituent Screening Framework1. Sectoral Relevance (Eligibility Filter)<ol><li>50% revenue from defence, aerospace, or related strategic sectors (electronics, shipbuilding, missiles, avionics, drones).</li><li>PSU + Private sector mix for diversification.</li></ol>2. Order Book Visibility<ol><li>Order book ≥ 2–3x annual revenue (gives long-term earnings visibility).</li><li>Track L1/L2 pipeline (recent tenders, RFPs, DRDO/ISRO projects).</li></ol>3. Financial Health<ol><li>Revenue Growth: 12–15%+ CAGR expected over next 3–5 years.</li><li>Margins: Healthy EBITDA margins (15–25% for electronics, 10–15% for shipyards).</li><li>Debt: Preference for debt-free or low-debt balance sheets.</li></ol>4. Strategic Importance &amp; Moat<ol><li>Monopoly/oligopoly players </li><li>Niche tech suppliers with high R&amp;D </li><li>Export potential</li></ol>5. Valuation Discipline<ol><li>PSUs: Buy on dips, when P/E &lt; long-term avg or when order inflows accelerate.</li><li>Growth Tech players: Accept premium if R&amp;D moat and scalable market.</li></ol>6. Governance &amp; Promoter Track Record<ol><li>Stable government backing (PSUs) = lower risk.</li><li>For private firms → check corporate governance, execution track record, cash flow quality.</li></ol>

Equal-weighting — thematic portfolios start with that approach because:<ol><li data-list="bullet">It avoids bias toward large PSUs (HAL, BEL) dominating returns.</li><li data-list="bullet">Ensures even exposure to core compounders + high-growth bets.</li><li data-list="bullet">Keeps it simple, transparent, and easy to rebalance quarterly/annually.</li></ol>

This smallcase will be rebalanced on an as-needed basis

GI Defence Titans Theme

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Bharat defense sector: Self-Reliance, Rising Budgets, Export & Long Order books Driving growth.

GI Defence Titans Theme

Overview

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