Defence stocks rallied in early trade on Tuesday after the government cleared acquisition proposals worth more than Rs 1.1 lakh crore. The Nifty India Defence index gained 1.14%.
Astra Microwave Products, Apollo Micro Systems, Data Patterns (India), Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), Zen Technologies, BEML, Solar Industries India, Paras Defence and Space Technologies, among other defence stocks surged up to 4%.
On September 7, the Defence Acquisition Council (DAC) accorded Acceptance of Necessity (AoN) for procurement proposals worth Rs 1.1 lakh crore, spanning the Army, Navy and Air Force. Nearly 98% of the value is earmarked for domestic industry.
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So far in FY27, DAC has given approvals worth Rs 1.62 lakh crore.
Analysts believe the latest approvals further strengthen the medium-term procurement pipeline for both public and private sector defence companies.
Defence Stocks To Benefit
In the near to medium term, finalization of large tenders for defense PSUs should be keenly watched out for.
Brokerage firm Motilal Oswal Financial Services reiterated its positive stance on the defence sector and maintained Bharat Electronics (BEL) as its preferred pick. It has a ‘Buy' rating on BEL shares with a target price of Rs 530, based on the 45x two-year forward earnings.
Motilal Oswal has a ‘Buy' call on HAL shares with a target price of Rs 5,800 apiece.
The brokerage firm maintained ‘Buy' on Astra Microwave Products shares with a target price of Rs 1,900, based on the 42x two-year forward earnings.
It has ‘Neutral' call on Bharat Dynamics and Zen Technologies shares.
According to Antique Stock Broking, HAL, BEL and BEML are among the key potential beneficiaries, while private-sector players including Bharat Forge, Godrej Precision Engineering and L&T could also benefit depending on programme allocation and localisation content.
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“We remain constructive on the defence sector, supported by the expanding pipeline of acquisition programmes, increasing domestic sourcing and the government's continued focus on strengthening indigenous defence capabilities,” said Antique Stock Broking.
It believes India's defense sector is on a multi-year structural upcycle, driven by a steady growth in budgeted capital expenditure over FY2026-30E, surging AON approvals, and push toward indigenization.
The brokerage firm maintained ‘Buy' rating on Mazagon Dock Shipbuilders, HAL, BEL, Bharat Dynamics, Zen Technologies, Solar Industries India, Astra Microwave and PTC Industries.
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