Drones have emerged as a new challenge for defence forces around the world. They are small, cheap and easy to deploy. And often they are difficult to detect and intercept. India has also seen several drone incidents along its borders in recent years. This has pushed the armed forces to strengthen their counter-drone capabilities.
But the drone story is only one part of the picture. Behind every counter-drone system lies a complex electronics stack. Radars detect incoming objects. Surveillance optics track movement. Electronic warfare systems disrupt hostile signals. These technologies form the backbone of modern air defence systems.
India is also trying to build more of these capabilities at home. Defence policies are increasingly encouraging local manufacturing of electronic systems. As a result, companies working in defence electronics are getting greater attention. Orders linked to radar systems, avionics, surveillance equipment and electronic warfare platforms are rising.
The stocks in this list reflect that broader theme. The focus is on companies where defence electronics plays a central role in the business. These firms are involved in technologies such as radar systems, avionics, electro-optics and counter-drone electronics. Companies mainly dependent on aircraft, missiles or heavy engineering platforms were not considered.
#1 Bharat Electronics: The Backbone of India’s Defence Electronics
Incorporated in 1954, Bharat Electronics manufactures and supplies electronic equipment and systems to the defence sector. The company also has a limited presence in the civilian market.
India’s push to modernise its defence systems and strengthen domestic manufacturing is driving steady demand for defence electronics. Radar systems, electronic warfare platforms and surveillance technologies are becoming central to this shift. Bharat Electronics, a key supplier of defence electronics to the Indian armed forces, reported strong financial performance during the first nine months of FY26 amid this backdrop.
The company reported revenue from operations of Rs 7,154 crore for the quarter ended December 2025, compared with Rs 5,771 crore in the same period last year. This represents a growth of about 24% year-on-year (YoY). Net profit rose to Rs 1,580 crore from Rs 1,312 crore a year earlier, marking an increase of roughly 21%.
The growth was supported by execution of several defence programs. Major deliveries during the period included systems related to the LRSAM project, battlefield surveillance solutions, electronic warfare systems and components for the Light Combat Aircraft program. These projects together contributed significantly to revenue execution in the current financial year.
Order visibility remains strong. The company’s order book stood at about Rs 73,450 crore as of late January 2026. New orders received till 1st January crossed Rs 18,100 crore. Management indicated that additional contracts linked to naval electronics, fighter aircraft systems and electronic warfare programs are expected before the end of the fiscal year, supporting future growth.
Navigating the Semiconductor and Localisation Push
At the same time, the company is focusing on indigenization and technology development. Semiconductor components form a significant part of many defence electronics systems. To reduce supply risks, the company is working on alternate designs and domestic sourcing while also engaging with upcoming semiconductor manufacturing facilities in India.
Exports are another area of focus. The company is targeting an increase in export contribution from the current 3–4% of revenue to around 5% in the near term, with opportunities emerging in communication systems, satellite equipment and coastal surveillance solutions for overseas markets.
With a strong order pipeline, increasing localisation of components and continued defence spending by the government, Bharat Electronics is expected to remain a key beneficiary of India’s defence electronics expansion in the coming years.
In the past year, Bharat Electronics share price has rallied 65.4%.
Bharat Electronics 1 Year Share Price Chart
#2 Data Patterns (India): A Vertically Integrated Avionics Powerhouse
Data Patterns (India) is one of the fastest-growing companies in the defence and aerospace electronics sector in India. It is among the few vertically integrated defence and aerospace electronics solutions providers catering to the indigenously developed defence products industry.
India’s push to strengthen indigenous defence manufacturing is creating new opportunities for companies in advanced defence electronics. Higher defence spending and greater focus on systems such as radars, avionics and electronic warfare are driving this trend.
Against this backdrop, Data Patterns (India) reported strong growth so far in FY26, supported by higher execution of defence programmes. The company delivered a strong December quarter. Revenue in Q3 FY26 rose 48% YoY to around Rs 173 crore. Net profit increased 31% YoY to Rs 58 crore.
The growth was largely driven by execution of defence programs and rising acceptance of the company’s electronics solutions across multiple platforms. Production accounted for the largest share of revenue at about 57%, while development programs contributed around 37%. The company’s order book has reached a record Rs 1,868 crore, providing visibility for future execution and highlighting growing demand for its systems.
Development Pipeline: From LCA Mark-2 to Next-Gen Radars
The company continues to expand its role across several defence projects. It has secured development and production orders for electronic warfare suites and is working on advanced avionics and sensor systems for fighter aircraft platforms, including programs linked to the LCA Mark-2. These development programs could translate into larger production orders once testing and certification stages are completed.
Data Patterns is also investing in new technologies to expand its long-term opportunity pipeline. The company is developing advanced radars, electronic warfare platforms and missile seeker technologies. Management indicated that these initiatives could address a potential opportunity of Rs 15,000–Rs 20,000 crore over the coming years as these programs move toward production and deployment.
The company is also exploring opportunities in overseas markets. Export orders currently stand at about Rs 63 crore, with ongoing engagements in the United Kingdom and other international markets. With a growing order pipeline and continued investment in product development, Data Patterns appears positioned to benefit from India’s expanding defence electronics ecosystem.
In the past year, Data Patterns (India) share price has surged 132.6%.
Data Patterns (India) 1 Year Share Price Chart
#3 Zen Technologies: A Leader in Counter-Drone and Simulation Tech
Zen Technologies was incorporated in 1996. The company designs, develops and manufactures combat training solutions and Counter-drone solutions for defence and security forces. It is actively involved in the indigenization of technologies, which are beneficial to Indian armed forces, state police forces, and paramilitary forces.
India is trying to strengthen its defence capabilities at home. This is increasing the demand for defence electronics. Systems such as simulators, electronic warfare equipment and anti-drone technologies are becoming more important for modern defence forces.
Zen Technologies reported steady growth in Q3 FY26 due to demand for defence training and counter-drone systems.
For the quarter ending December 2025, the company announced consolidated revenue of Rs 177.8 crore, indicating a year-over-year growth of approximately 16.8%. Profit after tax reached Rs 55.7 crore, reflecting an increase of approximately 30.6% YoY. Profit improved largely because of a better product mix and careful cost control.
Order Book Dynamics and Global Export Strategy
The order pipeline has become more robust in recent months. The order book was at Rs 1,082 crore in December 2025 and rose to Rs 1,427 crore by January 2026. About half of the order book is linked to simulators while the remaining portion relates to anti-drone systems, reflecting the company’s two core defence electronics segments.
Zen Technologies expects stronger execution over the next few years as defence spending and training requirements increase. The company indicated that it could execute around Rs 4,000 crore worth of orders over the next two years. The company is also spending on manufacturing, supply chain and product development to support future growth.
The company is also expanding its capabilities through acquisitions and new technology development. Recent acquisitions such as ARI and Anawave have strengthened its position in naval and tactical simulators. These systems have already started drawing interest from overseas defence customers. Exports are also becoming an important focus area.
Exports represent another important focus area. The firm is exploring opportunities in regions such as the Middle East, Africa, and Southeast Asia. Management expects that exports will gradually rise and could represent 20–30% of revenue in the medium term as international orders expand.
Zen Technologies is positioning itself to capitalize on increasing global demand for simulation and counter-drone technologies, fueled by a growing order book and ongoing investment in advanced defense electronics. Nonetheless, the speed of defense procurement and execution schedules will continue to be crucial elements impacting growth
In the past year, share price of Zen Technologies rallied 26.8%.
Zen Technologies 1 Year Share Price Chart
#4 Paras Defence and Space Technologies: Specialist in Niche Electro-Optics
Paras Defence and Space Technologies (PDST) is a private sector company primarily engaged in the designing, developing, manufacturing, and testing of a variety of defence and space engineering products and solutions.
India’s defence modernisation drive is increasing demand for advanced electronics used in surveillance, optics and aerospace systems. Technologies such as electro-optics, avionics and space imaging payloads are becoming critical parts of modern defence platforms. Paras Defence and Space Technologies reported steady growth in the December quarter, supported by work on defence electronics projects.
For Q3 FY26, the company reported revenue of about Rs 100.8 crore. In the same quarter last year, revenue was Rs 81.9 crore. This signifies an increase of about 23% YoY. Net profit for the quarter was approximately Rs 19.5 crore, rising from Rs 16.6 crore the previous year, showing an increase of roughly 18% YoY. The growth was supported by higher execution of defence and space electronics orders.
Expanding into Avionics and Space-Imaging Payloads
Paras Defence operates largely in specialised defence electronics segments such as electro-optics, space optics and heavy engineering systems for aerospace platforms. Its optical systems are used in surveillance equipment, targeting solutions and space imaging applications. These technologies are gaining importance as defence forces try to improve their detection and monitoring systems.
The company is also increasing its presence in avionics-related systems. During the quarter, the board approved the formation of a new subsidiary that will focus on avionics solutions, including manufacturing, testing, repair and overhaul of systems for defence and aerospace platforms. The subsidiary will strengthen the company’s role in electronics and avionics components used across military aircraft and space systems.
With increasing demand for surveillance optics, avionics systems and aerospace electronics, Paras Defence is gradually positioning itself in specialised niches of the defence electronics value chain. However, the pace of large defence orders and execution timelines will remain important factors influencing the company’s growth trajectory in the coming years.
In the past year, share price of Paras Defence and Space Technologies rallied 66.1%.
Paras Defence and Space Technologies 1 Year Share Price Chart
Comparative Analysis: Order Books and Profitability Ratios
Let’s now turn to the valuations of the companies in focus, using the Enterprise Value to EBITDA multiple as a yardstick.
Valuations of Companies in focus
| Sr No | Company | EV/EBITDA Ratio | 5-Year Average EV/EBITDA | Industry Median | ROCE | ROE |
| 1 | Bharat Electronics | 38.0 | 19.6 | 31.3 | 38.9% | 29.2% |
| 2 | Data Patterns (India) | 48.0 | 46.2 | 21.0% | 15.2% | |
| 3 | Zen Technologies | 28.8 | 48.2 | 37.2% | 26.1% | |
| 4 | Paras Defence and Space Technologies | 49.3 | 46.0 | 15.6% | 11.5% |
Return ratios vary across the companies. Bharat Electronics reports the strongest numbers with ROCE of 38.9% and ROE of 29.2%. Zen Technologies also shows strong profitability with ROCE of 37.2% and ROE of 26.1%. Data Patterns (India) reports ROCE of 21% and ROE of 15.2%. Paras Defence and Space Technologies has lower ratios with ROCE of 15.6% and ROE of 11.5%.
Valuations show a different trend. Bharat Electronics is trading at 38 times EV/EBITDA, which is much higher than its five-year average of 19.6 times and also above the industry median of 31.3 times. Data Patterns is trading at 48 times, close to its five-year average of 46.2 times. Paras Defence is trading at 49.3 times, also near its five-year average of 46 times. Zen Technologies is trading at 28.8 times, which is lower than its five-year average of 48.2 times.
Conclusion
India’s defence spending is increasingly shifting toward electronics systems such as radar, avionics, surveillance and electronic warfare. These technologies are now becoming central to modern defence platforms and counter-drone systems. As localisation efforts increase, companies working in these areas are seeing steady demand.
The companies discussed above operate in different parts of this defence electronics ecosystem. Some supply large electronic systems, while others focus on specialised areas such as avionics, optics or counter-drone technologies. Their ability to convert order books into actual execution will remain important.
Defence projects usually run over long timelines. That gives revenue visibility, but it also means consistent execution is necessary. Any delays in delivery can affect growth.
Exports may also offer some opportunities if Indian defence technologies begin to find buyers in overseas markets. For investors, it may be useful to add these companies to a watchlist to keep track of how they deliver on their current orders and how their capabilities develop over time.
Disclaimer:
Note: 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 educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep dive into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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