defencestocks

India’s fresh defence order push is putting key stocks in focus, with Jefferies seeing up to 39% upside in select shares.
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September 8, 2026
India’s defence procurement has got another push, with the government clearing acquisition proposals worth about Rs 1.10 lakh crore across the Army, Navy and Air Force. The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, accorded Acceptance of Necessity (AoN) for a wide range of equipment on September 7, including Advanced Light Helicopters, Arudhra radars, Marine Gas Turbines and Ground-Based Multi-Purpose Jammers. Importantly, around 98% of the approved procurement is to be made from Indian industry, according to the Ministry of Defence.
The breadth of the approvals is significant for domestic defence manufacturers because the latest package is spread across aircraft, helicopters, radars, electronic warfare, mobility and other systems rather than being concentrated in one programme. Macquarie’s September 7 flashnote described the development as “DAC approves Rs1.1 trillion in acquisitions”, while Jefferies, in its September 8 report, said “Operation Sindoor lends credibility to India’s defence indigenisation story.”
Macquarie said the latest approvals take year-to-date FY27 Acceptance of Necessity approvals to Rs 1.62 lakh crore, down 6% from the same period last year. The brokerage also said the Defence Ministry’s mandate that around 98% of procurements be sourced from Indian industry should support the domestic defence ecosystem.
Jefferies takes the longer-term view, arguing that the combination of indigenisation, rising defence spending, exports and operational validation is widening the opportunity for Indian companies. The brokerage expects India’s domestic defence capital spending to grow at a 13% CAGR from FY26 to FY29, while defence exports are expected to rise at a 12% CAGR from FY26 to FY29.
What the latest approvals mean
The government’s announcement shows how wide the latest procurement package is. For the Army, approvals cover Chemical, Biological, Radiological and Nuclear (CBRN) reconnaissance vehicles, High Mobility Vehicles, Self-Propelled Mechanical Mine Layers, Advanced Light Helicopters, Trawl Tanks and the Sarvatra Bridge System.
For the Navy, the package includes Arudhra radars and the design, development and subsequent procurement of Marine Gas Turbines. The Air Force approvals include Ground-Based Multi-Purpose Jammers and the Defence Forces Secure Access Card system.
That breadth matters for listed defence companies because the domestic opportunity is spreading across platforms, electronics, radar systems, propulsion, missiles and specialised equipment.
Bharat Dynamics: Hold rating leaves limited upside
Bharat Dynamics has the lowest upside among the six companies covered by Jefferies. The brokerage has assigned a ‘Hold’ rating with a target price of Rs 1,280, implying 2% upside.
Jefferies describes BDL as India’s primary missile manufacturer and system integrator. It expects the company to deliver around 30% earnings-per-share CAGR from FY26 to FY30, helped by execution scaling up from a low base.
The company had an order book of Rs 26,200 crore, and Jefferies expects this to rise to Rs 42,100 crore by FY30. The brokerage sees large export orders materialising as an upside risk, while continued execution weakness remains a downside risk.
The cautious rating therefore does not reflect a lack of business opportunity. Rather, Jefferies believes the valuation already captures much of the potential.
Astra Microwave: Moving towards larger defence programmes
Astra Microwave has a ‘Buy’ rating and a target price of Rs 2,055, implying 19% upside from Jefferies.
Jefferies said Astra has moved up the value chain within large defence programmes. The company, which started with radio-frequency and microwave components and sub-systems, has also evolved into supplying complete radar systems.
Revenue is expected to grow at a 19% CAGR from FY26 to FY30, while operating leverage is expected to drive a 28% PAT CAGR over the same period.
Astra’s opportunity is increasingly linked to larger programmes rather than only individual components. Jefferies sees opportunities around the Uttam active electronically scanned array radar, QRSAM and Sukhoi-30 upgrades, giving the company exposure to a wider set of domestic defence electronics requirements.
Bharat Electronics: Macquarie’s preferred defence pick
Bharat Electronics is the only company in the combined coverage where the two brokerages provide separate calls. Jefferies has a ‘Buy’ rating and a target price of Rs 490, implying 20% upside, while Macquarie has an ‘Outperform’ rating with a target price of Rs 550.
Macquarie’s September 7 flashnote specifically identified BEL as its preferred stock within the defence sector. The brokerage’s broader argument is that the latest procurement approvals should aid the development of the domestic defence ecosystem.
BEL’s position is particularly relevant because the latest government approvals include Arudhra radars for the Navy and Ground-Based Multi-Purpose Jammers for the Air Force. These are areas where domestic defence electronics capabilities can play a meaningful role.
Jefferies expects BEL’s revenue to increase from Rs 27,480 crore in FY26 to Rs 37,053 crore in FY28, while net profit is projected to rise from Rs 6,064 crore to Rs 8,288 crore over the same period.
The order pipeline is also significant. BEL received Rs 29,700 crore of orders in FY26, and its order book stood at Rs 72,300 crore. Management has guided for Rs 55,000 crore of order inflows in FY27, including a potential Rs 30,000 crore QRSAM order.
Jefferies also connects BEL directly with the operational validation of Indian defence systems, noting that Akashteer, developed by BEL, was among the India-made systems used during Operation Sindoor.
Data Patterns: Indigenous electronics support medium-term visibility
Data Patterns has a ‘Buy’ rating and a target price of Rs 5,545, implying 21% upside from Jefferies.
The brokerage describes Data Patterns as a niche defence electronics player, with an order book equivalent to about one year of FY26 revenue. It expects revenue to rise from Rs 925 crore in FY26 to Rs 1,378 crore in FY28, while net profit is projected to increase from Rs 274 crore to Rs 420 crore over the same period.
Jefferies sees visibility coming from the existing order book as well as the broader pipeline. Rising indigenisation and India’s export focus are expected to support order-flow growth.
The company’s role also extends into the wider systems deployed by India’s armed forces. Jefferies said Data Patterns and other domestic electronics companies have supplied components for systems used during Operation Sindoor.
That creates a different growth profile from the large platform manufacturers. Data Patterns is positioned further down the technology chain, but increasing electronics content in defence systems can expand its addressable market.
Solar Industries: Defence contribution set to rise sharply
Solar Industries has a ‘Buy’ rating and a target price of Rs 28,160, implying 32% upside in Jefferies report.
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The brokerage expects Solar’s defence business to become a much larger part of its overall operations. Defence accounted for 27% of sales in FY26, and Jefferies expects this to rise to 40% by FY30. The brokerage expects this expansion to support a 31% earnings CAGR from FY26 to FY30.
Solar has expanded its capabilities into defence and aerospace products including rockets and drones. Jefferies sees India’s defence indigenisation push, export opportunities and demand for advanced energetic systems as important drivers.
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The company is also linked to products such as Nagastra loitering munitions. Jefferies said drones made by Solar Industries were reportedly used during Operation Sindoor, adding to its argument that operational use can strengthen the credibility of Indian-made defence products in export markets.
Hindustan Aeronautics: Jefferies sees strong upside
Hindustan Aeronautics has the highest upside in Jefferies’ defence coverage. The brokerage has assigned a ‘Buy’ rating and a target price of Rs 6,800, implying 39% upside.
Jefferies describes HAL as India’s market leader in defence aircraft manufacturing, with an order book equivalent to 7.7 times FY26 revenue. It expects earnings delivery from the existing order book to improve as execution scales up.
The brokerage expects revenue to increase from Rs 33,089 crore in FY26 to Rs 43,106 crore in FY28.
HAL also sits at the centre of several systems cited in Jefferies’ assessment of Operation Sindoor. The brokerage noted that BrahMos missiles were launched from the Sukhoi-30 fighter jet manufactured by HAL.
That combination of an established manufacturing base, a large order book and a broad programme pipeline makes HAL the highest-upside name in Jefferies’ current defence coverage.
Jefferies’ defence picks, ranked by upside
Macquarie: Fresh approvals span Army, Navy and Air Force
Macquarie’s September 7 flashnote provides the immediate procurement trigger behind the broader sector opportunity. The Defence Acquisition Council’s AoN approvals of around Rs 1.1 lakh crore cover equipment requirements across all three services
For the Indian Army, the approved requirements include CBRN reconnaissance vehicles, High Mobility Vehicles, Self-Propelled Mechanical Mine Layers, Advanced Light Helicopters, Trawl Tanks and the Sarvatra Bridge System.
The Army equipment is aimed at different operational requirements, from detecting and marking areas contaminated by CBRN agents to improving mobility in challenging terrain and enabling rapid mine-laying and river-crossing capabilities.
For the Indian Navy, approvals include Arudhra radars and Marine Gas Turbines. The government said the Arudhra radar will replace existing Air Route Surveillance Radars at various naval air stations, while the Marine Gas Turbine programme is intended to reduce dependence on foreign vendors.
For the Indian Air Force, the approvals cover Ground-Based Multi-Purpose Jammers and the Defence Forces Secure Access Card system. The jammer is intended to counter adversary radars, while the secure-access system will replace paper-based identity cards and passes with an interoperable Radio Frequency Identification-based smart-card system
The breadth of the approvals is important because it means the procurement cycle is creating opportunities across platforms, electronics, mobility and specialised equipment rather than concentrating on a single category.
Domestic sourcing remains central to the two brokerages’ defence view
Macquarie said around 98% of procurement is mandated from Indian industry, which it expects to aid the development of the domestic defence ecosystem.
Jefferies reaches the sector from a longer-term perspective. It said India’s defence indigenisation drive has gradually reduced import dependence and created a larger domestic market for locally developed systems. The brokerage also sees exports becoming an increasingly important part of the opportunity.
India’s defence exports rose 63% year-on-year to Rs 38,400 crore in FY26, according to Jefferies, compared with the government’s Rs 30,000 crore target for the year. The brokerage estimates exports will rise at an 11% CAGR from FY26 to FY30, reaching Rs 58,400 crore.
Jefferies said operational deployment of Indian systems has improved their export credibility, with interest widening across Southeast Asia, the Middle East, Africa and Latin America. It also expects opportunities for Indian companies to participate as component and sub-system suppliers in overseas defence programmes.
The brokerage’s point is not simply that India is spending more on defence. It is that domestic companies are increasingly participating in the development, manufacturing and export of systems that were earlier sourced from overseas suppliers.
Defence stocks: What the two reports indicate
For the six companies covered by Jefferies, the upside range runs from 2% for Bharat Dynamics to 39% for Hindustan Aeronautics. Five companies carry ‘Buy’ ratings, while Bharat Dynamics has a ‘Hold’ recommendation
Macquarie’s view adds another layer to the picture, with Bharat Electronics emerging as its preferred defence company after the latest procurement approvals.Taken together, the government announcement and the two brokerage reports point to a defence cycle that is becoming broader in both product scope and supplier participation. The immediate catalyst is the fresh procurement pipaeline, while the longer-term case rests on indigenisation, higher domestic manufacturing and the growing credibility of Indian defence products in export markets.
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