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ICICI Securities Report
Domestic brokerage firm ICICI Securities maintains its structurally positive stance on the Indian defence sector. Government policies remain firmly supportive, evidenced by the MoD's Rs 3 trillion annual capital outlay target by CY29. This support implies a sustained double-digit CAGR in defence capex; further, with the recent Defence Procurement Manual 2025, acquisition timelines are expected to be significantly compressed.
Given that DAC approvals were at an all-time high in FY26 and continued in Q1 FY27 (Rs 52,000 crore AoN approved), the brokerage expects the order awarding momentum to pick up 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 70,00 crore 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.
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