Defence stocks today: Defence stocks rallied up to 9% on Tuesday after the Defence Acquisition Council (DAC) approved capital procurement proposals worth approximately ₹2.12 lakh crore, strengthening the sector’s order pipeline and reinforcing expectations of sustained military modernisation spending.
With around 82% of the approved procurements earmarked for Indian industry, the clearances also highlighted the government’s continued push towards domestic defence manufacturing.
Apollo Micro Systems led the gains, rising 8.7%, followed by Data Patterns at 8.1%, Paras Defence at 7.3% and Astra Micro Systems at 5.9%. MTAR Technologies hit its 5% upper price band, while Midhani, Hindustan Aeronautics (HAL), Bharat Electronics (BEL), BEML and Mazagon Dock Shipbuilders advanced 3-4%.
Aequs was the exception, declining 19% after reporting a wider net loss of ₹52.2 crore in Q2 FY27, compared with ₹20.6 crore a year earlier, despite 45% year-on-year revenue growth.
DAC approvals cover Army, Navy and Air Force modernisation
The DAC granted Acceptance of Necessity (AoN) for a broad range of military equipment covering mobility, surveillance, air defence, precision strikes and counter-drone warfare.
For the Indian Army, the approvals included High Mobility Vehicles, Self-Propelled Tracked Gun Systems, Gun Shot Response Systems, Light Multi Role Helicopters (LMRHs), Very Short-Range Air Defence Systems (VSHORADS) and Platform-Based Counter Unmanned Aerial Systems. The list also covered long-range unmanned aerial systems, surveillance UAVs, an Integrated Surveillance and Strike System and Long Range Kamikaze Drone Systems.
The Indian Air Force received clearances for helicopters, air-defence systems, weapons and mobile X-Band Doppler Weather Radar Systems. Special Utility Helicopters are intended to meet air-transport requirements, while the weather radars will support high-resolution, localised surveillance in forward areas.
For the Indian Navy, the approvals included Active Offboard Decoy Systems (AODS), which are expected to strengthen protection against anti-ship missiles, along with other naval platforms to be designed and built indigenously.
Defence sector outlook: What lies ahead and stocks to buy
Antique Stock Broking remained constructive on the sector, stating that the latest clearances strengthened the medium-term procurement pipeline for both public- and private-sector defence companies. It identified HAL and BEL as potential beneficiaries.
“We believe India’s defence sector is on a multi-year structural upcycle, driven by a steady growth in budgeted capital expenditure over FY2026-30E, surging acceptance of necessity (AON) approvals, with cumulative approvals of ₹18.9 trillion in FY2023-YTD FY27 vs ₹9.2 trillion in FY13-22, and push toward indigenization,” the brokerage said.
Antique has BUY ratings on HAL, BEL, Solar Industries, Astra Microwave and Krishna Defence and Allied Industries.
However, the brokerage cautioned that sustained revenue growth would depend on faster conversion of AoN approvals into contracts and the conversion of the sizeable procurement pipeline into executable orders.
Meanwhile, Bajaj Broking also described India’s defence sector as an attractive long-term structural growth opportunity within the manufacturing universe. It highlighted the potential support from military modernisation, increasing localisation, a strong domestic order pipeline, rising exports and sustained policy backing.
The brokerage also pointed to the Defence Acquisition Procedure, positive indigenisation lists, defence industrial corridors and liberalised foreign direct investment norms as measures supporting the domestic manufacturing ecosystem.
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.
