Defence manufacturing stocks like HAL, Bharat Electronics and Larsen & Toubro are in the spotlight. India’s Make in India defence push is opening a large opportunity. This spans across military aircraft, transport planes, helicopters, unmanned aerial vehicles and defence upgrades. CLSA estimates the military aerospace opportunity at around Rs 10.3 lakh crore over the next decade. The brokerage has identified Hindustan Aeronautics, Bharat Electronics and Larsen & Toubro as its preferred listed plays.
A key opportunity in the report is the multi-role transport aircraft (MTA) programme, for which the Indian Air Force is seeking 60 aircraft. CLSA estimates the programme at around Rs 1 lakh crore and says it is aimed at replacing the ageing fleet of more than 100 An-32 transport aircraft.
CLSA rates all three stocks ‘Outperform’, with Bharat Electronics offering the maximum upside of 27.2%, followed by Larsen & Toubro at 19% and Hindustan Aeronautics at 11.2%.
| Defence stock | CLSA rating | Target price | Upside |
| Hindustan Aeronautics | ‘Outperform’ | Rs 5,481 | 11.2% |
| Bharat Electronics | ‘Outperform’ | Rs 522 | 27.2% |
| Larsen & Toubro | ‘Outperform’ | Rs 4,842 | 19.0% |
Source: CLSA, August 14, 2026.
CLSA on Hindustan Aeronautics: ‘Outperform’
Hindustan Aeronautics has the largest direct exposure to India’s military aerospace opportunity among the three stocks. CLSA estimates its opportunity pipeline at around Rs 5.8 lakh crore, covering Tejas Mk 2, Indian Multi Role Helicopter, Light Utility Helicopter, Sukhoi upgrades, MTA, unmanned aerial vehicles, engines and exports.
CLSA says Hindustan Aeronautics has an order book of around US$26 billion and a visible opportunity base of around Rs 5.8 lakh crore. The company is also expanding into commercial aerospace, with the brokerage pointing to its export opportunity.
The report describes Hindustan Aeronautics as the “strongest listed play on India’s c.Rs10tn military aviation pipeline”, citing its exposure across fighters, helicopters, engines, unmanned aerial vehicles, upgrades and transport aircraft.
Target price and upside: CLSA has a target price of Rs 5,481 for HAL, implying 11.2% upside.
CLSA on Bharat Electronics: ‘Outperform’
Bharat Electronics has the highest upside among the three stocks covered by CLSA. The brokerage has an ‘Outperform’ rating and a target price of Rs 522, implying 27.2% upside.
The company is among the newer players permitted to bid for fifth-generation fighter programmes. CLSA also includes Bharat Electronics among its preferred listed plays on India’s defence aerospace opportunity.
The MTA programme could create additional opportunities for domestic defence manufacturers as the government expands indigenous participation in military aviation. CLSA also points to hybrid import-plus-Make-in-India programmes such as the C-295.
Target price and upside: CLSA has a target price of BEL at Rs 522, implying 27.2% upside, the highest among the three stocks.
CLSA on Larsen & Toubro: ‘Outperform’
Larsen & Toubro also carries an ‘Outperform’ rating from CLSA, with the brokerage identifying the company as one of the listed beneficiaries of India’s expanding defence aerospace opportunity.
CLSA says Larsen & Toubro is among the new players allowed to bid for fifth-generation fighter programmes. The company therefore has an opportunity to participate in newer defence programmes alongside its existing capabilities.
The MTA programme is another potential opportunity. CLSA says the Request for Proposal has reportedly been issued to five Indian companies: Hindustan Aeronautics, Tata Advanced Systems, Mahindra Defence, Adani and Reliance. Tata has partnered with Lockheed Martin for the C-130J, while Mahindra has tied up with Embraer for the C-390 Millennium.
Target price and upside: CLSA has a target price of L&T at Rs 4,842, implying 19% upside.
Make in India defence: MTA programme adds Rs 1 lakh crore opportunity
The MTA programme is one of the most important specific opportunities in the CLSA report. The Indian Air Force is seeking 60 MTA aircraft, and CLSA estimates the programme at around Rs 1 lakh crore.
The aircraft is expected to serve as a logistics platform for transporting troops, vehicles, missiles, ammunition and relief material. CLSA says its payload of around 18-30 tonnes would bridge the gap between the smaller C-295 and the heavy-lift C-17 fleet.
The programme also targets replacement of the Indian Air Force’s ageing fleet of more than 100 An-32 transport aircraft, which were inducted during the 1980s.
CLSA says the Request for Proposal has reportedly been issued to five Indian companies, including Hindustan Aeronautics, Tata Advanced Systems, Mahindra Defence, Adani and Reliance.
Make in India push: Rs 10.3 lakh crore aerospace opportunity
CLSA estimates India’s military aviation opportunity at around Rs 10.3 lakh crore over the next decade, driven by fighters, MTA, helicopters, unmanned aerial vehicles and upgrade programmes.
The brokerage says Hindustan Aeronautics is the biggest listed beneficiary, with an opportunity pipeline of around Rs 5.8 lakh crore. It also points to record-high defence procurement approvals and the MTA tender as signs of a multi-year aerospace opportunity.
Exports are another part of the opportunity. CLSA says Hindustan Aeronautics is expanding into commercial aerospace and has won what it describes as India’s biggest export deal from Safran to supply engine components for LEAP engines.
Overall, CLSA sees a US$108 billion aerospace opportunity, of which Hindustan Aeronautics could account for 56%, or US$61 billion, by FY35.
Make in India boost: Which defence stock has the maximum upside?
CLSA’s three preferred stocks all carry an ‘Outperform’ rating, but the potential upside varies significantly. Bharat Electronics leads with 27.2% upside, followed by Larsen & Toubro at 19% and Hindustan Aeronautics at 11.2%.
Hindustan Aeronautics has the largest direct military aerospace pipeline, while Bharat Electronics has the highest potential upside in CLSA’s estimates. Larsen & Toubro is positioned to participate in newer defence programmes, including fifth-generation fighter opportunities.
The MTA programme adds another large opportunity, with CLSA estimating its value at around Rs 1 lakh crore and linking it to the replacement of more than 100 An-32 aircraft.
Conclusion
CLSA’s ‘Outperform’ calls on Hindustan Aeronautics, Bharat Electronics and Larsen & Toubro come against a military aerospace opportunity estimated at Rs 10.3 lakh crore over the next decade. The MTA programme adds a potential Rs 1 lakh crore opportunity, while fighter aircraft, helicopters, unmanned aerial vehicles, upgrades and exports add to the broader pipeline.
Disclaimer: This article is based on CLSA’s August 14, 2026 report and discusses the brokerage’s ratings, target prices, estimates and views. The information is provided for news-reporting and informational purposes only and does not constitute investment advice or a recommendation to buy, sell or hold any security. Brokerage estimates and target prices may change and may not materialise. Readers should conduct their own research and consult a SEBI-registered investment adviser before making investment decisions.