3 Defence stocks that have won over both FIIs and DIIs

While this has been a usual scenario for a few quarters now, this quarter, there are select stocks that were bought by both FIIs and DIIs, especially from a particular sector.

The sector? The aerospace and Defence sector, it is.

It is quite a rare scenario when both FIIs and DIIs invest in the same stocks from this sector.

So, here in this article, we will explore the top three: defence sector stocks that were bought by both FIIs and DIIs during the first quarter of FY27.

#1 Ideaforge Technology Limited: India’s largest Pure-play Drone Manufacturer

Ideaforge Technology Ltd. is one of the largest listed drone manufacturers in      the country with more than 19 years of experience in the Unmanned Aerial Vehicles (UAV) industry. The company started manufacturing drones when drones were not as popular as now.

Ideaforge ranks third across the globe in manufacturing dual-use drones, and more than 9,50,000 missions were completed using drones of the company.

As of June 2026, the company has a portfolio of 108 patents, including granted and those waiting for approval.

Between April and July 2026     , FIIs increased their stake in this company by 7.54% points, while DIIs raised their stake by 9.78% points, taking the total holding to 8.27% and 10.98% respectively at the end of the quarter.

First US Order Win

Ideaforge won its first order in the US from the Lamar Police Department, Texas, which will be using the company’s drones for security and safety of their school district.

Apart from this, Ideaforge also became the first Indian drone manufacturer to train North Atlantic Treaty Organization (NATO) forces at the US National Test Pilot School and showcased its products to US Department of Defence customers in Alaska under extreme weather conditions.

Ideaforge also entered into a strategic contract with Digital Media Professional Inc. in Japan for developing next-generation AI-enabled drones.

Apart from this, the company also got customer acceptance for its future-ready electronic warfare (EW)-resilient drone system. As per management, this system is currently in the testing phase, after which it will be up for operational deployment.

Management indicated that this system would have features like anti-jamming, anti-spoofing, and related features which are becoming standard requirements in defence sector drones.

Healthy Revenue Visibility

During FY26, the company saw one of the strongest order inflows. Ideaforge won orders worth around Rs 530 crore across defence and civil customers.

As the number of orders increased, the company ramped up its execution as well, and more than 40% of the orders received during Q3FY26 were completed within Q4FY26.

At the beginning of FY27, the orderbook of the company stood at Rs 310 crore, and the management expects this entire book to be executed by the end of this fiscal year, with most orders to be completed within the first three quarters themselves.

Growing Sales and Narrowing Losses

Sales for FY26 grew by 40.37% YoY to Rs 226 crore from Rs 161 crore in FY25. Though the company had a loss of Rs 17 crore during FY26, it narrowed compared to the loss of Rs 62 crore reported in FY25. 

Note: Q1FY27 results are not yet announced.

Trading at a premium?

The stock is trading at an enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EVITDA) of 185.2x, which is way higher than the industry median of 39.2x, indicating that the stock is relatively overpriced.

1-year Share Price Chart of Ideaforge Technology Ltd.

#2 Paras Defence and Space Technologies Limited: Leading Submarine Periscope Manufacturer Across Asia Pacific

Paras Defence and Space Technologies Ltd. is one of the leading defence and space sector manufacturers, with specialisation in developing periscopes which are used in submarines. The company is also the only private sector player in the indigenous hyperspectral camera manufacturing arena.

Paras Defence also offers turnkey electromagnetic protection solutions and works closely with DRDO for improving soldiers’ safety on the borders.

During Q1FY27, FIIs increased their stake in this company by 3.23%, taking the total to 8.29% at the end of the quarter, while DIIs raised their stake by 1.8%, taking their total holding to 3.04%.

Highest-ever Orderbook

At the end of FY26, Paras Defence had one of its highest-ever orderbook which stood at Rs 986 crore, offering solid revenue visibility for the upcoming quarters. Optics and optronic systems constituted around 55% of the orderbook, while defence engineering orders made up another 35%, and the remaining 10% orders were for anti-drone solutions.

During April 2026, the company bagged another order from DRDO worth around Rs 7.72 crore for developing Ku/C-Bank Satellite Communication Phased Array Antennas for Airborne Applications.  

This project is scheduled to be completed by April 2028 and is expected to enhance the presence of Paras Defence in the advanced defence communication technologies space.

Further, in June 2026, the company received another significant order from Bharat Electronics Ltd. (BEL) worth Rs 52.82 crore. This order is for supplying electro-optics products, which are one of the core competencies of Paras Defence. This order is expected to be executed by September 2027.

Beyond Defence Manufacturing

The investment for the project is expected to be around Rs 6,200 crore, with the state government allotting 50 acres of land for the facility.

Paras Defence is venturing into semiconductors via its subsidiary Paras Semiconductors and has already entered into a contract with the Government of Madhya Pradesh for building an advanced semiconductor packaging facility.

This facility will be leveraging advanced semiconductor manufacturing and packaging technologies to develop semiconductor devices for sensor technologies, optical and optronic systems, and other strategic applications as well.

Management also indicated that the facility could support future expansion into AI chips and advanced semiconductor technologies as market opportunities evolve.  

46% Surge in Profit

Sales grew from Rs 365 crore in FY25 to Rs 477 crore in FY26, logging a 30.7% YoY growth. Profit for the period grew by 46% YoY from Rs 61 crore to Rs 89 crore.

Return on capital employed (ROCE) stood at 16.9%, a little higher than the industry median of 15.3%.

Note: Q1FY27 results are not yet announced.

Growth Story Already Priced In?

The stock is trading at a price-to-earnings (PE) of 123.6x, higher than the industry median of 67.1x. The price-earnings to growth (PEG) ratio also stood at 3.7x, higher than the industry median of 1.2x, indicating that the stock is relatively overvalued even if adjusted for growth.

1-Year Share Price Chart of  Paras Defence and Space Technologies Ltd.

#3 Astra Microwave Products Limited: Leading Radio Frequency and Microwave Systems Manufacturer

Astra Microwave Products Ltd. is one of the leading defence electronics manufacturers focused on electronic warfare, missile electronics, radio frequency, and microwave systems, satellite communications, meteorological solutions, and space electronics.

From a components and subsystem supplier earlier, the company has evolved itself to a system integrator and development-cum-production partner for strategic defence programmes, working closely with Hindustan Aeronautics Ltd. (HAL), BEL, DRDO, Indian Army and ISRO.

During Q1FY27, FIIs raised their stake in this company by 3.18%, taking their total holding to 10.7%, while DIIs raised their stake by 0.67%, taking their overall holding to 16.09% at the end of the quarter.

Record Orderbook Offering Multi-Year Revenue Visibility

Astra Microwave’s orderbook grew to Rs 2,141 crore at the end of FY26, up from Rs 1,952 crore at the end of FY25, offering solid revenue visibility for the upcoming quarters.

The company received fresh orders worth Rs 403 crore during Q4FY26 while executing orders worth Rs 488 crore during the same period.

Defence and public sector orders made up 54% of the total orderbook, while export orders contributed to another 33%, and  space sector orders made up 11%. The remaining 2% orders were from the meteorology segment. Management is expecting new orders worth Rs 1,600 crore during FY27.

However, one recent order has already surpassed management expectations as the company received a Rs 2,205.23 crore order from HAL for the procurement of 122 Active Antenna Array Units (AAAU) and 121 Interface Frames for the Uttam Radar programme. The order is scheduled to be executed over the next five years.

This is one of the largest orders in the company’s history and exceeds its FY26 closing order book of Rs 2,141 crore, significantly strengthening long-term revenue visibility. The order also reinforces Astra’s position in indigenous radar programmes and deepens its partnership with HAL under India’s defence modernisation and self-reliance initiatives.

Demerger of Space, Meteorology and Hydrology Businesses

In a strategic move, the company is demerging its Space, Meteorology and Hydrology businesses for better management of the business segments and improving capital allocation.

Management also indicated its upcoming multiple proprietary, IP-led products, which are expected to be launched before Diwali this calendar year.

Financials and Returns

Sales of Astra Microwave surged from Rs 1,051 crore in FY25 to Rs 1,163 crore in FY26, growing at 10.7% YoY.

Profit for the period grew by 25.3% YoY from Rs 154 crore to Rs 193 crore. ROCE of Astra Microwave stood at 20.25%, higher than the industry median of 15.3%.

The company even has a higher dividend yield of 0.12% compared to 0.02% of the industry median.

Already trading at a premium?

The stock is trading at a PE of 88.7x, compared to the industry median of 67.1x, while the PEG ratio is at 2.2x, higher than the industry median of 1.2x as well, reflecting that the stock is relatively overpriced, even if adjusted for growth.

1-Year Share Price Chart of Astra Microwave Products Ltd.

Final Thoughts

While both FIIs and DIIs simultaneously increasing their stakes in these select defence stocks during Q1FY27 reflects growing institutional confidence in the defence sector’s long-term growth prospects, all three stocks are trading at premium valuations compared with their industry peers, suggesting that a significant portion of their future growth expectations may already be reflected in their share prices.

So, for now, you can add these stocks to your watchlist and keep an eye on order execution, which is a key factor determining companies’ potential, future order inflows, and the companies’ ability to deliver on their ambitious growth plans.

We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information. 

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only. 

Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible. 

Disclosure: The writer and her dependents do not hold the stocks discussed in this article. 

The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities, or other related investments of issuers and/or companies discussed therein.  The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors.  Investors must make their own investment decisions based on their specific objectives and resources, and only after consulting such independent advisors as may be necessary.