Indian defence companies are expected to report subdued earnings in the seasonally weak first quarter of FY27, with revenue recognition likely to remain back-ended and concentrated in the second half of the fiscal year, particularly in the fourth quarter.
Although the sector continues to benefit from strong policy support, including the FY27 Defence Budget of approximately ₹7.85 lakh crore and a capital outlay of around ₹2.19 lakh crore, near-term revenue visibility remains constrained by execution-related challenges such as delayed project clearances, milestone-based billing cycles, and supply-chain dependencies.
Analysts at Choice Institutional Equities, however, believe these near-term headwinds do not reflect any weakness in underlying demand. Most defence companies have entered FY27 with healthy order backlogs and improved production readiness, indicating that the key challenge lies in the timing of execution rather than demand generation.
The brokerage noted that the primary concern continues to be the persistent gap between robust order inflows and revenue conversion, which has delayed earnings translation despite a strong demand environment.
Meanwhile, major programme awards — including the QRSAM project (approximately ₹30,000 crore), P-75(I) submarines (around ₹70,000 crore), and the Next-Generation Corvette programme (around ₹33,000 crore) — are expected to strengthen order book visibility. However, their contribution to near-term revenue, particularly in the first quarter, is likely to remain limited.
“In this context, we view Q1FY27 as a transitional quarter. While reported earnings may remain subdued, underlying execution momentum is gradually building, with clearer visibility on recovery expected as conversion accelerates through the year, particularly into H2FY27,” said Choice Institutional Equities.
Defence Sector Outlook
The brokerage firm maintained a constructive stance on the defence sector despite a seasonally soft Q1FY27, as execution timing and order conversion, not underlying demand, is expected to drive near-term performance. Sustained order inflows underpin medium-term visibility, even as execution delays may weigh on the quarterly print.
The performance of defence stocks is expected to remain sensitive to order announcements and execution progress. It believes risk-reward continues to favour operators with demonstrated execution capability and platform relevance.
Bharat Electronics (BEL), Bharat Dynamics and Garden Reach Shipbuilders & Engineers are Choice Institutional Equities’ preferred names, given their positioning across priority segments and robust order pipelines.
“Near-term volatility should be viewed as an entry opportunity into the structural defence theme,” said the brokerage firm.
Here’s how top defence stocks such as Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Bharat Dynamics, Mazagon Dock Shipbuilders and Garden Reach Shipbuilders & Engineers are expected to perform in the June quarter.
HAL Q1 Results Preview
Hindustan Aeronautics’ revenue in the quarter ended June is estimated to grow 10% to ₹5,301 crore from ₹4,819 crore in the year-ago period. Net profit in Q1FY27 is expected to rise 2.3% to ₹1,415 crore from ₹1,383.8 crore, year-on-year (YoY), according to estimates by Choice Institutional Equities.
EBITDA during the first quarter is estimated at ₹1,325, projected to rise 3.3% YoY, while EBITDA margin is forecast to compress 161 basis points (bps) YoY to 25.0%.
Key things to watch out for in HAL Q1 results include the delivery timing of GE engines for Tejas programme.
Bharat Electronics Q1 Results Preview
BEL’s Q1 net profit is estimated to rise 2.2% to ₹990 crore from ₹969 crore, while revenue is expected to grow 8% to ₹4,795 crore from ₹4,439.7 crore, YoY, on steady order execution.
EBITDA is projected at ₹1,247 crore, up 0.7% YoY, with margin forecast to compress 189 bps YoY to 26.0% in Q1FY27.
Order finalisation timeline for Satrugat EWS, QRSAM and NGC are key monitorables in Bharat Electronics Q1 results 2026.
Bharat Dynamics Q1 Results Preview
Bharat Dynamics’ Q1FY27 revenue is estimated to jump 50% to ₹347 crore from ₹231.1 crore, YoY, while net profit is projected to spike 287% to ₹71 crore from ₹18.3 crore, YoY.
EBITDA margin is expected to contract 851 bps QoQ to 3.0% on operating deleverage from the lower revenue base, while the 2,130 bps YoY improvement reflects a weak Q1FY26 base which saw margin turn negative.
Mazagon Dock Shipbuilders Q1 Results Preview
Mazagon Dock Shipbuilders is expected to report revenue of ₹3,151 crore in Q1FY27, registering a growth of 20% from ₹2,625.6 crore YoY, on steady execution. PAT is expected to increase by 17.6% YoY to ₹532 crore. EBITDA is anticipated to rise by 25.3% YoY to ₹378 crore, while EBITDA margin is likely to improve 51 bps YoY to 12%, according to Choice Institutional Equities.
Garden Reach Shipbuilders & Engineers Q1 Results Preview
Garden Reach Shipbuilders & Engineers’ Q1FY27E estimated to post revenue growth of 30% YoY at ₹1,703 crore in the quarter ended June 2026. The company’s net profit is expected to rise 22.1% YoY to ₹147 crore.
EBITDA is anticipated to increase by 29.3% YoY to ₹145 crore, while margin is expected to remain stable YoY. Order inflow and execution pace on patrol vessel or corvette programmes are likely to remain in focus.
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