Zen Technologies, Paras Defence Rally Up To 6% After Rs 52,000 Crore DAC Approval

Defence stocks advanced on Monday after the Defence Acquisition Council (DAC) approved capital acquisition proposals worth about Rs 52,000 crore, raising expectations of fresh domestic orders across missile systems, drones, electronic warfare and surveillance platforms.

Shares of Zen Technologies rose 5.5%, while Paras Defence gained 5%. Dynamic Technologies, Unimech Aerospace and Data Patterns also traded higher. BEML, however, declined more than 1%.

The latest approvals are expected to support order inflows for listed defence companies over the coming quarters, as most of the proposed acquisitions are intended to strengthen indigenous defence manufacturing. Brokerage Motilal Oswal said the approvals add to the procurement pipeline built over the past two years and improve revenue visibility for domestic defence companies.

DAC Clears Procurement Across Army, Navy And Air Force

The DAC, chaired by Defence Minister Rajnath Singh, granted Acceptance of Necessity (AoN), or in-principle approval, for capital acquisitions covering the Army, Navy and Air Force.

For the Army, the approvals include the AKASH TARANG anti-unmanned aerial vehicle electronic warfare system, Man Portable Anti-Tank Guided Missile (MPATGM) systems, the Medium Range Surface-to-Air Missile (MRSAM) weapon system, Very Short Range Air Defence System (V-SHORADS), an Active Protection System for tanks and a jet-based kamikaze drone system.

The Navy received approval for the procurement of Multi Influence Ground Mines (MIGM), Naval Shipborne Unmanned Aerial Systems (NSUAS) and the establishment of a Land-Based Testing Facility for electric propulsion systems.

For the Air Force, the DAC approved the procurement of a Fixed-Wing High Altitude Pseudo Satellite (FW-HAPS) and other proposals to strengthen intelligence, surveillance, reconnaissance and communication capabilities.

According to the Ministry of Defence, the new systems will improve operational readiness by enhancing air defence, anti-drone capability, electronic warfare, surveillance and tank protection.

Brokerage Sees Wider Opportunity For Domestic Defence Companies

Motilal Oswal said the latest AoN approvals, together with those cleared over the past two years, expand the addressable market for Indian defence manufacturers and improve the visibility of future order inflows. The brokerage added that defence companies already have healthy order books and could also benefit from export opportunities. 

The brokerage said, *"We expect these AoN approvals, coupled with those granted over the last two years, to increase the overall addressable market for domestic players and enhance order inflow visibility."* It added, *"We maintain our positive stance on the defence sector and, within our coverage universe, Bharat Electronics remains our top pick."* 

Fast-Track Procurement May Accelerate Defence Orders

Motilal Oswal also pointed to the Ministry of Defence's decision to increase the procurement powers of the armed forces.

The brokerage said the revised framework could facilitate procurements exceeding Rs 1.3 lakh crore through a fast-track process. It said contract awards could be made within 90 days of proposal submission, while procurement decisions may be completed within six to 12 months. The mechanism will focus on drones, autonomous systems, electronic warfare equipment, artificial intelligence-enabled intelligence platforms and software-defined weapon systems. 

Companies Seen As Potential Beneficiaries

According to Motilal Oswal, the latest approvals could benefit several listed defence companies depending on the equipment being procured.

The brokerage identified Bharat Electronics, Bharat Dynamics, Hindustan Aeronautics, Data Patterns, Paras Defence, Apollo Micro Systems, Astra Microwave and Solar Industries among the likely beneficiaries across various programmes, including anti-drone systems, missiles, electronic warfare, naval unmanned systems and high-altitude surveillance platforms. 

Brokerage Ratings

Motilal Oswal reiterated its recommendations on key defence stocks:

BUY: Bharat Electronics
BUY: Hindustan Aeronautics
BUY: Astra Microwave
NEUTRAL: Bharat Dynamics
NEUTRAL: Zen Technologies 

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