The defence sector stocks are in focus today. Large defence approvals and a steady push toward domestic manufacturing are setting the tone for listed players, with visibility improving across key programmes.
A recent report by Motilal Oswal shows approvals worth about Rs 2,38,000 crore, covering surveillance, combat systems, aircraft, and missile platforms. The note points to strong order books, rising localisation, and export opportunities as the main drivers for growth. Against this backdrop, the brokerage has reiterated ‘Buy’ ratings on four stocks while staying selective on others.
Motilal Oswal positive on defence sector
Motilal Oswal continues to stay positive on the defence sector, driven by a pipeline of orders and policy support for local manufacturing. The brokerage notes that domestic companies are in a better position as dependence on imports reduces over time, even though some near-term challenges linked to imported components may remain.
The firm also sees export opportunities adding to growth over the medium term while existing order books provide revenue visibility. “We maintain our positive stance on the defense sector, and within our coverage universe, Bharat Electronics remains our top pick,” the brokerage said.
Motilal Oswal on Bharat Electronics: ‘Buy’
Motilal Oswal has reiterated a ‘Buy’ rating on Bharat Electronics with a target price of Rs 520, implying an upside of about 26.1% from current levels.
The brokerage expects Bharat Electronics to benefit from large platform-based opportunities, particularly from naval programmes such as next-generation corvettes. Orders are expected to flow through shipbuilders before moving to system integrators, where Bharat Electronics has a strong presence. The firm also points to opportunities in air defence systems and electronic warfare, which should support steady inflows.
The report adds that a sizeable order pipeline and execution track record position the company well for consistent earnings growth. “BEL is well positioned to benefit in the near term,” the brokerage said, pointing to platform orders and system integration opportunities as key drivers.
Motilal Oswal on Hindustan Aeronautics: ‘Buy’
Motilal Oswal has maintained a ‘Buy’ rating on Hindustan Aeronautics with a target price of Rs 5,500, suggesting an upside of about 52.7% from current levels.
The brokerage highlights that deliveries of Tejas Mark 1A aircraft are expected to begin in the FY27, subject to completion of testing, certification, and integration milestones. It also notes additional contracts such as advanced light helicopters and continued progress in indigenous fighter programmes.
While timelines remain linked to coordination with the Indian Air Force, visibility improves as trials near completion. The report suggests that execution of these programmes will be a key factor in driving earnings over the next few years. “Deliveries of the indigenous HAL Tejas Mark 1A fighter jet are expected to begin early in FY27,” the brokerage said, while noting that acceptance trials could take additional time.
Motilal Oswal on Bharat Dynamics: ‘Buy’
Motilal Oswal has reiterated a ‘Buy’ rating on Bharat Dynamics with a target price of Rs 1,800, indicating an upside of about 58.3% from current levels.
The brokerage points to strong momentum in missile programmes, with Bharat Dynamics completing key production milestones and preparing to scale deliveries. It also highlights localisation efforts, noting that a large share of components for certain missile systems is now sourced domestically.
This reduces dependence on imports and provides some protection from global supply disruptions. The company is also expanding its manufacturing and testing infrastructure, which should support future programmes and order inflows. “BDL has also achieved a significant breakthrough by successfully localising over 90% of the components,” the report said, adding that this strengthens its position in upcoming defence contracts.
Motilal Oswal on Astra Microwave Products: ‘Buy’
Motilal Oswal has maintained a ‘Buy’ rating on Astra Microwave Products with a target price of Rs 1,150, implying an upside of about 27.7% from current levels.
The brokerage expects growth to be supported by both defence and space-related opportunities. It notes that the company is restructuring its business through a planned demerger of its space, meteorology, and hydrology divisions into a separate entity.
This move is expected to improve operational focus and allow each business to pursue its own growth path. The defence segment remains a steady contributor, supported by ongoing programmes and system-level opportunities. “The company expects to complete the demerger by 1QFY28,” the brokerage said, adding that both entities will operate independently after the restructuring.
Motilal Oswal on Zen Technologies: ‘Neutral’
Motilal Oswal has taken a ‘Neutral’ stance on Zen Technologies with a target price of Rs 1,400, implying an upside of about 4.3%.
The brokerage acknowledges steady demand for simulators and anti-drone systems and expects subsidiaries to contribute more meaningfully over the next few years. However, it prefers to wait for better visibility on order inflows and sustainability of this growth before turning more positive.
The report indicates that while the business outlook remains stable, valuations already factor in much of the near-term growth. “Standalone business will continue to benefit from simulator and anti-drone orders,” the brokerage said, while also pointing to rising contribution from subsidiaries.
Conclusion
Motilal Oswal builds its view on a steady flow of large approvals, improving localisation, and execution across key programmes. Bharat Dynamics and Hindustan Aeronautics offer the highest upside among the stocks covered, supported by missile systems and aircraft programmes respectively.
Bharat Electronics stands out for its strong position in system integration and electronics, while Astra Microwave Products brings a mix of defence and space exposure through its restructuring plan. Zen Technologies remains on the watchlist with limited upside at current levels.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.