India’s defence sector could be entering a fresh phase of structural growth, with rising domestic defence spending creating a large addressable opportunity for listed defence companies.
Jefferies estimated that India’s domestic defence capital spending could grow at a 16% CAGR between FY26 and FY30, compared with a 10% CAGR for overall defence capex. The brokerage sees a $60 billion-plus domestic defence opportunity over four years, while defence exports are expected to grow at an 11% CAGR to ₹584 billion by FY30.
“We believe India defence spend should see a double-digit CAGR in the medium-term in the background of global geopolitical tensions,” said the brokerage
Another key pillar of the brokerage’s bullish on the defence sector view is the improving credibility of Indian-made defence equipment in international markets. Jefferies pointed to the operational validation of systems such as Akashteer and BrahMos during Operation Sindoor, arguing that battlefield deployment could strengthen India’s credentials as a defence exporter.
Jefferies expects defence exports to rise 11% annually through fiscal 2030, reaching ₹584 billion, and has identified 5 stocks that can potentially perform well in the coming quarters.
Jefferies defence stock targets: Full list
1. Hindustan Aeronautics (HAL) — Buy | Target price: ₹6,800 | Upside: 39%
HAL remains Jefferies’ preferred large defence platform play, with the brokerage describing it as the market leader in Indian defence aircraft manufacturing. Its ₹2.55 lakh crore order book is equivalent to 7.7 times FY26 revenue, while an additional ₹1.8 lakh crore pipeline provides visibility for FY27-FY30.
Jefferies expects manufacturing revenue to grow at more than 25% in the medium term, while service revenue should rise at a 6% CAGR. It also expects operating leverage to support margin improvement as revenue growth plays out. The brokerage values HAL at 35x September 2028 earnings and has a ₹6,800 price target, implying about 39% upside from the price considered in its report.
2. Bharat Electronics (BEL) — Buy | Target price: ₹490 | Upside: 20%
BEL is another core beneficiary of India’s defence-electronics indigenisation drive. Jefferies calls it the market leader in Indian defence electronics, with its current order book standing at 2.6 times FY26 revenue.
The brokerage sees a ₹1.2 trillion visible pipeline, which should provide medium-term revenue visibility, while rising indigenisation could support order-flow growth. Jefferies estimates September 2028 EPS at ₹12.2 and applies a 40x target PE multiple, arriving at a ₹490 target price, representing around 20% upside.
3. Bharat Dynamics (BDL) — Hold | Target price: ₹1,280 | Upside: 2%
Bharat Dynamics has one of the strongest order-book positions among the companies covered, with its order book equivalent to around 11 times FY26 revenue. Jefferies expects the missile manufacturer and system integrator to deliver 28% revenue CAGR and 30% EPS CAGR over FY26-FY30.
However, valuation is the key reason for the Hold call. Jefferies believes the stock already reflects much of its growth potential. Its ₹1,280 target offers only around 2% upside, although the brokerage sees a bull-case target of ₹1,650 if deliveries accelerate and sizeable export orders emerge.
4. Data Patterns — Buy | Target price: ₹5,545 | Upside: 21%
Jefferies describes Data Patterns as a niche defence-electronics player, with an order book equivalent to roughly one year of FY26 revenue. The brokerage sees sufficient visibility from the existing order book and pipeline to support medium-term growth.
Rising indigenisation and India’s growing focus on defence exports are expected to support order-flow growth. Jefferies estimates September 2028 EPS at ₹85 and applies a 65x PE multiple, giving a ₹5,545 target price, implying around 21% upside. Its bull-case target is ₹6,160 if defence orders accelerate and the Make-in-India push results in a higher proportion of domestic orders.
5. Solar Industries — Buy | Target price: ₹28,160 | Upside: 32%
Solar Industries is one of Jefferies’ strongest growth calls. The company has expanded beyond explosives and initiating systems into advanced defence and aerospace products, including rockets, loitering munitions and drones.
Jefferies expects the defence business to increase from 27% of sales in FY26 to 40% by FY30, driving a projected 31% earnings CAGR. Solar’s ₹180 billion defence order book is equivalent to 6.8 times FY26 defence sales and includes a ₹61 billion Pinaka order to be executed over 10 years.
The brokerage expects defence revenue to grow at a 42% CAGR through FY30 and sees margins reaching 28%. Its ₹28,160 target price, based on 70x September 2028 PE, implies about 32% upside.
6. Astra Microwave — Buy | Target price: ₹2,055 | Upside: 19%
Astra Microwave is another fresh Buy initiation by Jefferies. The brokerage describes it as a private defence and space electronics company moving up the value chain, with meteorology emerging as a meaningful second growth engine. Its order book has expanded fourfold over the past two years.
Jefferies expects Astra’s revenue to grow at a 19% CAGR and PAT at a 28% CAGR over FY26-FY30. Key defence programmes including the Uttam AESA radar, QRSAM and Su-30 upgrades are expected to provide medium-term revenue visibility, while the company’s transition from a subsystem supplier to a development-cum-production partner could support further order growth.
The brokerage has assigned a ₹2,055 target price, implying around 19% upside, based on a 55x September 2028 PE multiple. Its upside scenario is ₹2,200 if Astra gains market share and delivers stronger margins and earnings growth.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
