Reliance Infrastructure Share Price Hits Upper Circuit as Defence Arm Bags ₹600 Crore Deal

Shares of Reliance Infrastructure Ltd (RInfra) surged sharply on Wednesday, hitting the upper circuit limit of 5% on the BSE after its defence subsidiary Reliance Defence and Engineering Ltd (RDEL) signed a ₹600 crore contract with a government agency. The deal, which underscores the conglomerate’s growing presence in the strategic defence sector, has invigorated investor sentiment and placed Reliance Infrastructure back in the market spotlight.

Defence Deal Sparks Market Euphoria

RInfra’s stock rose to ₹196.85, its upper circuit for the day, following the announcement of the sizeable contract. Trading volumes spiked significantly, with buy orders piling up and no sellers in sight. The deal, reportedly involving the supply of next-generation combat-ready naval platforms, is expected to be executed over the next 24 months.

In a statement to the exchanges, Reliance Infrastructure said,

“This strategic order underlines the capabilities of our defence manufacturing arm in supporting the Government of India’s ‘Make in India’ and Atmanirbhar Bharat initiatives. The project will strengthen national security and position the company as a key player in the defence ecosystem.”

Street Reaction: A Signal of Strategic Revival?

Market experts view this development as a turning point for Reliance Infrastructure, which has had a challenging few years amid rising debt levels and delayed infrastructure projects.

Anirudh Sharma, Defence and Infra Analyst at KRChoksey, commented,

“The ₹600 crore deal boosts not just the topline potential of the defence subsidiary but also strengthens Reliance Infra’s consolidated revenue outlook. It is an indicator that RInfra is reviving its strategic focus through high-value defence contracts, which offer higher margins and long-term visibility.”

The defence sector, particularly naval and aerospace, has been a key area of expansion for RInfra, especially after acquiring Pipavav Defence (now RDEL) in 2015. While initial traction was slow, recent developments suggest that the company is now gaining operational traction.

Market Context: Tailwinds in Defence and Infra Sectors

The announcement comes at a time when the Indian defence sector is witnessing increased budgetary allocations and policy support for domestic production. The Defence Acquisition Procedure (DAP) 2020 has significantly improved the procurement environment for Indian private players, allowing them to bid competitively for government contracts.

India’s defence budget for FY26 is set at ₹6.21 lakh crore, with over ₹1.72 lakh crore earmarked for capital outlay, a portion of which is being increasingly routed to Indian manufacturers. This broader policy direction is expected to benefit companies like RDEL.

Rajeev Mehta, AVP – Equity Research at YES Securities, noted,

“The timing of this contract is ideal. With higher defence spending and localisation goals, RInfra's strategic investment in defence is beginning to show financial returns. If execution remains on track, we could see upward re-ratings in the coming quarters.”

Financial Position and Recent Developments

Reliance Infrastructure has been actively working on deleveraging its balance sheet. The company recently completed the monetisation of select infrastructure assets and infused funds via rights issues. Analysts believe that improved order book visibility through such defence deals could improve its credit outlook.

In Q4 FY25, RInfra reported a consolidated net profit of ₹221 crore, up 19% YoY, supported by better operating margins in its EPC and power distribution businesses. The latest deal is expected to contribute significantly to its EPC and defence revenues in FY26.

Investor Outlook: Near-Term Gains and Long-Term Re-Rating?

From a stock market perspective, RInfra’s current rally reflects both short-term optimism and long-term potential. The stock has already gained over 47% year-to-date, outperforming the BSE Capital Goods Index.

However, some analysts advise caution, highlighting execution risks and past delays in similar contracts.
Amit Shah, Senior Analyst at ICICI Direct, stated,

“While the stock’s current momentum is driven by sentiment, consistent execution of defence orders and timely delivery will be key to sustaining investor interest. Investors should watch for quarterly updates and execution timelines.”

Reliance Infrastructure’s stock price locking into the upper circuit after its subsidiary secured a ₹600 crore defence contract signals renewed investor confidence. With strategic alignment to national defence goals, stronger order book visibility, and macro tailwinds in the defence sector, RInfra appears poised for a potential structural turnaround.

Nevertheless, execution will remain a critical monitorable in the coming quarters, even as sentiment stays buoyed by today’s announcement.