India’s defence manufacturing push is creating fresh opportunities for listed companies working across electronics, missiles, avionics and advanced systems. A new sector report released by HSIE Research, the research arm of HDFC Securities, points to a long pipeline of domestic programmes and export prospects that could sustain growth for several years.
According to HDFC Securities,, the country’s policy push for domestic manufacturing, rising electronics content in modern weapons platforms, and large indigenous programmes such as Tejas fighter jets and missile systems are creating strong demand visibility for several companies.
Within this backdrop, the brokerage initiated coverage on key defence electronics and technology-driven suppliers as the strongest beneficiaries of the current spending cycle.
Here are three stocks that received favourable recommendations in the HDFC Securities report report along with their target prices and the investment rationale drivingthe brokerage view.
HDFC on Apollo Micro Systems: ‘Buy’
HDFC Securities has initiated coverage on Apollo Micro Systems with a ‘Buy’ rating and a target price of Rs 280, implying a potential upside of about 30.2%.
The brokerage sees Apollo Micro Systems as a fast growing defence electronics and weapons subsystems company that is steadily moving higher up the value chain.
It has long standing relationships with Indian defence laboratories and has participated in multiple missile and naval warfare programmes. The company is also expanding its capabilities beyond components into complete weapon systems.
HDFC Securities expects the company’s financial performance to accelerate sharply over the next few years. The report projects revenue, EBITDA and profit after tax to grow at a CAGR of 40%, 45.2% and 56.1% respectively between FY25 and FY28 as production orders increase and new programmes enter manufacturing stages.
Another major trigger highlighted in the report is the company’s push toward vertical integration through the acquisition of explosives maker IDL Explosives, which could expand its role in weapon manufacturing.
The brokerage also expects the order pipeline to strengthen as multiple weapon platforms under development move toward production.
“AMS’ diverse product portfolio under development, expertise in electronics segment, increasing R&D spends, and capability to manufacture complete weapon solutions provide long term visibility of strong order inflows,” HDFC Securitiesh said in its report.
HDFC Securities on Data Patterns India: ‘Buy’
HDFC Securities has also initiated coverage on Data Patterns (India) with a buy rating and a target price of Rs 3,770. This suggests a potential upside of about 12.2%.
The brokerage describes Data Patterns as a vertically integrated defence electronics company with capabilities spanning radars, avionics, missile systems, electronic warfare and satellite communications.
A key strength highlighted in the report is the company’s design and manufacturing model, which uses reusable building blocks to reduce production cycles and cost. This allows Data Patterns to maintain competitive pricing while protecting profitability.
The company is also involved in multiple major defence programmes including LCA Tejas fighter jets, BrahMos missiles, radar systems and several aerospace platforms.
“By maintaining inhouse control over the full design cycle, the company reduces reliance on imported technology and products while supporting domestic value addition and operational efficiency,” HSIE Research said in the report.
HDFC Securities on Bharat Electronics: ‘Add’
HDFC Securities has given an Add rating on Bharat Electronics with a target price of Rs 490, implying a potential upside of roughly 6.5%.
The brokerage views Bharat Electronics as a core beneficiary of rising defence electronics spending. The company operates as both a system integrator and a supplier of subsystems for multiple military platforms including radars, communications networks and electronic warfare systems.
Modern defence platforms increasingly rely on electronic systems, which is expanding the addressable market for companies such as Bharat Electronics.
The brokerage forecasts revenue growth of around 15% CAGR between FY25 and FY28, supported by large platform orders and recurring base contracts from the armed forces and defence agencies.
Another key factor is the company’s focus on research and development. Bharat Electronics spends a meaningful share of its revenue on developing indigenous technologies.
“BEL is at the forefront of the electronics subsegment in the Indian defence industry and operates both as a system integrator and a subsystems provider,” the brokerage noted in the report.
HDFC Securities believes the company’s strong order backlog and export push could sustain its growth trajectory over the medium term.
Conclusion
HDFC Securities defence sector report paints a constructive outlook for companies involved in electronics, weapons systems and advanced military technologies.
The brokerage believes global security tension and India’s push for domestic manufacturing are creating sustained demand for defence equipment.