While investors’ attention has been focused on Europe’s rearmament, the Indo-Pacific region is starting to undergo an equally significant military transformation. Japan has embarked on its largest increase in defence spending since 1945, while South Korea, India and others are also boosting budgets.
At the centre of this regional build-up sits Australia, a key US ally and logistical hub for its Indo-Pacific strategy. The country is investing heavily in submarines, patrol vessels and base infrastructure to strengthen its own defences and support allied operations, while also being home to one of the world’s few pure-play defence-drone companies. The following three Australian companies highlight the growing investment case for Indo-Pacific defence stocks as regional governments rearm and modernise.
Three defence stocks to consider arming your portfolio with
Austal (Sydney: ASB) is an Australian shipbuilder, supplying fast patrol-vessels, coastal craft and support ships. A hallmark of the Indo-Pacific region is long distances and contested coastal waters, making these lighter and agile vessels essential for surveillance and maritime deterrence. Domestic demand is strong, with Austal recently delivering its ninth Evolved Cape-class Patrol Boat to the Royal Australian Navy.
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Austal also contributes to Australia’s wider security strategy by building the patrol boats that Canberra provides to Pacific Island nations such as Fiji and Samoa under the Pacific Maritime Security Program. The year to 30 June 2025 saw revenue grow by 24% , while earnings before interest and tax doubled.
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Ventia Services Group (Sydney: VNT) provides the infrastructure and base-support services that Australia’s defence capabilities rely upon. This includes maintaining bases and training areas across the country. This service has become more important as the country strengthens its military posture in northern Australia and deepens co-operation with the US amid growing tensions in the region.
In September 2025, Australia’s Department of Defence awarded Ventia two Base Services Transformation packages worth A$2.7 billion (£1.3 billion). The department says these contracts ensure that “bases and training areas are safe and secure, and support people as they live, train and work on the Defence estate”. Profits are growing steadily. In the first half of 2025, net income rose 11.9 %, with earnings per share up an annual 16.5%. With long-dated, government-backed contracts, Ventia offers exposure to the infrastructure side of the Indo-Pacific defence build-up.
Drones have become a grim fixture of the ongoing war in Ukraine, prompting many countries to build up their own drone forces. But the other lesson many have learned is the importance of counter-drone technology: defence equipment that can disable or fight off drone attacks. The US has identified counter-drone capabilities as of its of 17 key priority-spend areas, while the EU is developing a “drone wall”.
DroneShield (Sydney: DRO) is well positioned to benefit as it specialises in counter-drone technologies. The Australian company develops and manufactures systems that detect, track and neutralise hostile drones using radar, radio-frequency and AI-enabled software. The group has a global customer base, with the Indo-Pacific region as a core segment. The largest slice of its sales comes from Europe, accounting for 36% of revenue. Asia ex-China makes up 29% of sales. In the first half of 2025, DroneShield reported record revenue of A$62.3 million, up nearly 210% year-on-year, and delivered its first-ever net profit.
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