BEL, HAL Among Key Beneficiaries In Defence As DAC Approves Proposals Worth Rs 21,772 Crore

ICICI Securities has provided a deep dive into the defence sector following the Defence Acquisition Council’s (DAC) approval of five capital acquisition
proposals worth almost Rs 21,800 crore. The approval spans a variety of key defence needs, ranging from maritime surveillance to the overhaul of armoured and air force fleet capabilities. Among the top beneficiaries identified by ICICI Securities are Bharat Electronics Ltd. (BEL), Astra Microwave Products Ltd., Hindustan Aeronautics Ltd. (HAL), and PTC Industries Ltd.

The DAC has greenlit the following proposals, all critical to enhancing India’s defence preparedness:

Procurement of Fast Attack Crafts (FAC) and Fast Interceptor Crafts (FIC):

• 31 New Water Jet Fast Attack Crafts (NWJFACs) for the Indian Navy to enhance coastal maritime operations and anti-piracy missions.

• 120 Fast Interceptor Craft (FIC-I) for coastal defence, specifically for escorting aircraft carriers, destroyers, frigates, and submarines.

Electronic Warfare Suite (EWS) for Su-30MKI Aircraft:

• The procurement of an EWS package, including External Airborne Self-Protection Jammer pods and Next Generation Radar Warning Receivers (NGRWR), to strengthen the capabilities of the Su-30MKI aircraft.

Procurement of Advanced Light Helicopters (ALH) M (MR):

• Six ALH M (MR) helicopters for the Indian Coast Guard (ICG).

Overhaul of Armoured and Air Force Fleets:

• Overhaul of T-72 and T-90 tanks, BMPs, and engines of Su-30MKI aircraft, which will enhance the operational life of India’s armoured fleet.

ICICI Securities notes that while the DAC’s approval is a positive development, the process from the AoN (Acceptance of Necessity) to actual order conversion typically takes two years, followed by a mobilisation period of 12-18 months. As a result, the benefits from these approvals may not materialise immediately.

ICICI Securities has identified several key beneficiaries within the defence sector:

• Bharat Electronics (BEL): BEL is expected to be the biggest beneficiary due to its involvement in the EWS package for the Su-30MKI aircraft and its participation in various other proposals, including shipbuilding and the overhaul of electronic components and fire control systems for tanks and BMPs.

• Astra Microwave: Astra is likely to benefit from the EWS package, particularly the Jammer pods and NGRWR systems.

• Hindustan Aeronautics Limited (HAL): HAL stands to gain from the procurement of ALH M (MR) helicopters and the overhaul of Su-30MKI engines. Additionally, PTC Industries is expected to benefit from the supply of critical components during the overhaul of Su-30MKI engines, following a memorandum of understanding (MoU) with HAL’s Koraput facility.

• Ordnance Factory Boards (OFBs) and other defence players: The overhaul of India’s armoured fleet, which includes revamping mechanical, electrical, and fire control systems, is likely to benefit various players in the defence ecosystem, especially those involved in indigenisation.

• Shipbuilding Proposals: The smaller vessels included in the shipbuilding proposals will be subject to competitive bidding, with both private companies and Defence Public Sector Undertakings (DPSUs) likely to participate.

Despite the current AoN being one of the smaller approvals in recent months, it marks a significant step forward after a three-month gap in domestic ordering. The total AoN approvals so far in financial year 2025 stand at Rs 1.6 lakh crore, compared to Rs 3.6 lakh crore and Rs 2.6 lakh crore in financial year 2024 and financial year 2023, respectively.