India’s defence sector continues to remain firmly in a structural upcycle, supported by strong execution, favourable policy momentum and increasing export opportunities. The newly-introduced Defence Procurement Manual (DPM) 2025 is expected to act as a key catalyst for domestic suppliers, particularly mid- and small-cap players with established capacity.
At the same time, Indian defence companies are rapidly transitioning from domestic suppliers to strategic partners in the global aerospace and defence ecosystem. Export revenues have grown tenfold in the past decade, crossing ₹23,622 crore in FY25, with a government target of ₹50,000 crore by 2029. This underscores the rising integration of Indian firms into global supply chains through partnerships with international OEMs.
Further strengthening the outlook, the Technology Perspective and Capability Roadmap (TPCR) 2025 has expanded the indigenisation pipeline to 457 items, more than double the 2018 list, with over half aligned to high-value segments such as electronics, electronic warfare and space systems. According to analysts, this roadmap reinforces policy continuity and offers visibility into a multi-decade defence capex cycle.
“We remain positive on the sector, aided by elevated geopolitical tensions, rising budgetary allocation and higher investment in emerging technologies like AI, robotics and autonomous systems. Private players stand to benefit from expanding export opportunities, while Defence PSUs are well-placed to capitalise on strong domestic demand and the government’s sustained focus on self-reliance,” said Krishna Doshi, Defence Analyst, Ashika Institutional Equity Research.
Brokerages also expect the positive momentum to reflect in Q2FY26 earnings. “From platform manufacturers to electronics and component suppliers, companies are demonstrating resilience, execution strength and healthy visibility,” said Putta Ravi Kumar, Defence Analyst, Choice Broking.
Here’s Defence Sector Q2FY26 Results Preview
Hindustan Aeronautics Q2 Results Preview
Hindustan Aeronautics (HAL) revenue growth of 36% QoQ and 10% YoY is expected, driven by accelerated fighter aircraft and helicopter deliveries. EBITDA may rise 40% QoQ with margins at 27.4%, while net profit could grow 24% QoQ. Timely progress on the GE engine for the Tejas aircraft programme remains a key monitorable in HAL Q2 results 2025.
Bharat Electronics Q2 Results Preview
BEL Q2 revenue growth of 26% QoQ and 22% YoY is anticipated, led by strong execution in radar and electronic warfare systems. Margins may moderate to 26.5% due to mix and higher material costs, though net profit is seen rising 19% QoQ, according to Choice Broking estimates.
Bharat Dynamics Q2 Results Preview
The defence PSU is estimated to report revenue growth of 30–35% YoY, with margins improving to ~20% on better fixed-cost absorption. BDL’s net profit may rise 29% YoY, aided by operating leverage. Missile programme orders (Akash, ATGM, QRSAM) remain key triggers.
Astra Microwave Q2 Results Preview
Astra Microwave’s revenue growth of 35% QoQ and 17% YoY is likely, with EBITDA up 41% QoQ. PAT may surge 84% QoQ, supported by radar and satellite communication projects.
Azad Engineering Q2 Results Preview
Steady performance expected with revenue up 12% QoQ and 37% YoY. EBITDA margins are likely to remain robust at 35.5%, with PAT growth of 58% YoY. Expansion plans for lean manufacturing facilities will be closely watched.
Defence Stocks Outlook
Analysts remain constructive on the sector. Doshi’s defence stock picks include Data Patterns India (Buy) and a positive outlook on Garden Reach Shipbuilders & Engineers, Mazagon Dock Shipbuilders, and Zen Technologies.
In its high-conviction investment ideas, Choice Broking maintains a positive stance on Bharat Electronics, Bharat Dynamics and Data Patterns India, which are expected to deliver strong growth in Q2FY26.
Overall, the defence ecosystem is well-positioned for sustained growth, backed by policy continuity, healthy order inflows, and strong execution visibility into FY26 and beyond.
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.
