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ICICI Securities Report
Indian defence stocks could remain in focus as domestic brokerage firm ICICI Securities reiterated its positive stance on the sector, citing strong government support, a massive procurement pipeline and rising opportunities across aerospace, missiles, drones and defence electronics. The brokerage expects order awards to accelerate over FY27 and FY28, creating a favorable backdrop for leading defence companies.
In its latest sector update, ICICI Securities said the Ministry of Defence's target of Rs 3 trillion in capital outlay by CY29 underscores the government's commitment to military modernisation. The brokerage believes this spending roadmap could drive sustained double-digit growth in defence capital expenditure over the medium term.
Further, with the recent Defence Procurement Manual 2025, acquisition timelines are expected to be significantly compressed.
With Defence Acquisition Council (DAC) approvals reaching record levels in FY26, ICICI Securities expects order awarding activity to gather pace in FY27/28, especially in aerospace, missiles, electronic warfare and drone defence/offence side as the fabric of warfare has changed in the past couple of years.
Navy may receive the long-awaited Rs 70,000 crores submarine orders soon. The geopolitical backdrop continues to provide a structural tailwind, as the conflict in the Middle East has reinforced defence budget urgency across GCCs.
Indian OEMs with established export track records or MoUs are likely to benefit disproportionality, especially in the areas of missiles, drones, aerospace, defence electronics and radars.
Against these backdrops ICICI Securities prefers Hindustan Aeronautics Ltd., Solar Industries India Ltd. and Bharat Electronics Ltd., within the defence space.
Besides its preferred picks, the brokerage maintains Buy ratings on Astra Microwave, MIDHANI and PTC Industries, while Add ratings are assigned to Bharat Dynamics, Azad Engineering and Zen Technologies.
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