Defence stocks jumped up to 10% on Wednesday, led by strong buying across the Indian stock market today. The Nifty India Defence sector rallied as much as 2.5%, with all its constituents trading in the green.
MTAR Technologies emerged as the top gainer on the Nifty India Defence index, with over 10% rally. Paras Defence and Space Technologies, Data Patterns (India), AXISCADES Technologies and Mishra Dhatu Nigam rallied 3-5%.
Hindustan Aeronautics, Bharat Electronics (BEL), Bharat Dynamics (BDL), Mazagon Dock Shipbuilders, Cochin Shipyard, Garden Reach Shipbuilders & Engineers and Dynamatic Technologies were among other gainers.
The rally in defence stocks was also supported by a strong momentum in the Indian stock market today amid signs of resumption of US-Iran peace talks, raising hopes of an end to the Middle East conflict.
The Sensex surged over 1,300 points, while the Nifty 50 surpassed 24,200 level after surging over 1.5% during the session.
India’s defence sector continues to benefit from strong order visibility, supported by sustained inflows and a robust pipeline. Order backlogs are no longer a constraint for growth.
However, the pace of incremental large-ticket orders is expected to be more measured, with growth increasingly driven by repeat and replenishment orders. While overall visibility remains strong, the trajectory of order inflow (OI) growth is likely to moderate, analysts said.
Given the significant Acceptance of Necessity (AoN) accretion over the past two to three years, a budgeted FY27 capital outlay of approximately ₹2.2 lakh crore, and defence order backlogs estimated at 3–5 times annual revenue, analysts maintain a positive outlook on sector visibility.
By the end of FY26, most defence companies were sitting on lifetime-high orderbooks. Furthermore, the Defence Acquisition Council (DAC) cleared procurement proposals worth ₹6.7 lakh crore in FY26, with an additional ₹3 lakh crore+ for Rafale procurement.
Analysts believe a sizable portion of this could translate into orders in FY27, pushing orderbooks even higher for most companies. Consequently, order inflows are expected to be on the higher side in FY27.
That said, the sector appears to be transitioning into a more calibrated phase of the defence upcycle, where incremental ordering momentum may soften, and greater emphasis will be placed on execution efficiency, spending mix, and cash flow delivery.
Defence Sector Q4 Results
The defence sector’s revenue growth in the fiscal fourth quarter ending March 2026 is likely to be mixed due to exposure to exports and order delays in H1FY26. Brokerage firm ICICI Securities expects muted revenue growth for most state-run defence companies (MIDHANI being an exception), while private players appear to be performing better, with margins remaining within the guided range.
It expects mean revenue growth of ~15%, with PTC Industries at 283% YoY, Dynamatic Technologies at 27% YoY, Solar Industries at 31% YoY, and MIDHANI at 34% YoY, standing out as strong performers.
HAL is expected to see a 4% YoY decline in topline, while BEL is estimated to report 2% YoY revenue growth, reflecting a high base and execution headwinds.
Margin pressure is expected at the PSU level. HAL’s EBITDA margin could contract YoY, with PAT down ~10% YoY for both HAL and BEL, pointing to cost absorption and product mix effects.
Private players present a more differentiated picture as Solar Industries, PTC Industries and Astra Microwave Products may sustain healthy earnings momentum with PAT growth of 35%, 137% and 31% YoY, respectively, while Zen Technologies is expected to witness a sharp revenue and earnings decline of 30% and 48% YoY.
Going ahead, order accretion across missile platforms (QRSAM, MRSAM, VL-SRSAM), munitions (Pinaka, Nagastra), and the ramp-up in Tejas Mk-1A deliveries remain the key catalysts for the sector, ICICI Securities said.
Defence Stocks Picks
Considering the geopolitical scenario and ongoing wars, ICICI Securities expects procurement in the aerospace segment (missiles/interceptors, drone, radar and munitions) to benefit the most, partially aided by replenishment demand.
It likes Solar Industries and Azad Engineering, as their performance and orderbooks are expected to remain strong. HAL, in the PSU space, may see strong growth in FY27.
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.
