The ₹2.38 lakh crore defence approvals mark the creation of a large execution pipeline, even though order conversion will play out over the next few years. In the earlier pieces, we looked at the direct beneficiaries and the broader set of companies building exposure to core platforms.
But this cycle runs deeper. Beyond large systems, opportunities are emerging in components, subsystems, and maintenance areas critical to indigenisation. Demand is expected to spread across electronics, precision engineering, and ancillary services, opening the door for more specialised players.
In this piece, we focus on another set of defence companies that sit deeper in the value chain and are positioned to benefit as this defence capex cycle unfolds.
#1 Apollo micro systems: Powering the ₹30,000-cr QRSAM missile brain
Remember that the Ministry of Defence’s approval includes the Quick Reaction Surface-to-Air Missile (₹30,000 crore). Apollo Micro Systems (AMS) is a key contributor to the QRSAM program and Air defense tracked systems for the Army.
While the overall project negotiations with the Ministry of Defence are handled by Bharat Electronics, AMS supplies the critical brains and internal electronics. It has over 40 years of expertise in providing mission-critical electronic and electromechanical solutions.
Powering up to 63% of electronics in India’s missile programs
In addition, AMS has a diversified exposure to missiles, radars, and an array of advanced weapon systems. Across India’s indigenous missile programs, AMS supplies 60%-63% of the electronics and mechanical subsystems. Thus, the recently cleared QRSAM program means AMS’s subsystems will be in high demand.
In fact, the company is actively participating in over 80 to 90 indigenous missile programs. This also includes Akash VLSRAM. AMS is actively involved in the strategic Agni series (including Agni-1 and Agni-5), which are entering bulk production.
The Air Defense tracked systems
In air-defense tracked systems, AMS also supplies the critical electronic subsystems that enable these ground-combat platforms. AMS manufactures components such as Stabilised Turret Controls, Intelligent Vehicle Data Monitoring, and Expendable Decoys and Turret Control Systems.
Furthermore, the company is expanding its direct air defense offerings by developing complete Vehicle-Mounted Counter Drone Systems. To this end, it has formed a strategic partnership with Troop Comforts to jointly manufacture advanced air-defence systems. AMS consolidated order book stands at ₹1,305 crore, equivalent to two years of revenue.
Capacity Expansion: The Rs 300-crore Hyderabad manufacturing hub
To meet this incoming demand, AMS is scaling its operations by 12x. It is investing roughly ₹300 crore (including land) to build an integrated manufacturing facility (Unit-3) at Hardware Park-II in Hyderabad. This will house assembly lines for missile electronics and munitions.
#2 AXISCADES Technologies: The ‘Avionics Brain’ behind Su-30 and LCA Tejas
AXISCADES Technologies has direct and indirect exposure to several defence programs, primarily through its engineering, avionics, and systems integration capabilities.
From Avionics to UAVs: AXISCADES’ Multi-Platform Exposure
It has direct exposure to Advanced Light Helicopters (ALH) and ‘Prachand’ (LCH) Light Combat Helicopters (₹62,700 crore), and QRSM. Furthermore, it has indirect exposure to Su-30 fighter aircraft, remotely operated strike aircraft, aerial surveillance systems, air defense tracking systems, and high-capacity radio relay systems.
Avionics and Systems Integration: Powering India’s Fighter Jets and Helicopters
To this end, AXISCADES serves as a design and systems engineering collaborator with Hindustan Aeronautics to provide helicopter electronics for both the ALH and LCH platforms. In addition to these helicopter platforms, it also supplies avionics to HAL for Su-30, LCA Tejas, and Dornier.
But it’s not present in engine overhauls for the Su-30. The company is actively pursuing contracts related to the QRSAM program. During the Q3FY26 conference call, AXISCADES expected incremental order closures for the QRSM.
Stealth UAVs and Electronic Support: The DRDO Collaboration
In the remotely piloted strike aircraft & aerial surveillance systems, AXISCADES is involved in unmanned aerial vehicle (UAV) design, surveillance, and electronic support. It partners with the DRDO on UAVs such as the Lakshya and the Ghatak (stealth unmanned combat air vehicle).
C4I Systems and Tactical Battlefield Management
In the domains of air defence tracked systems and high-capacity radio relay systems, AXISCADES works extensively on C4I systems (integrating communication, radar, and surveillance networks) and tactical battlefield management systems. For the Indian Army, it assists in the design and upgrade of armored vehicles and provides vehicle electronics and C4ISR integration.
The ‘Power 930’ Strategy: Chasing ₹9,000 Crore Revenue
The company is aiming to be one of the top 3 players in India across Aerospace, Defence, and ESAI within the next 2-3 years. This is driven by its “Power 930” strategy, which targets ₹9,000 crore in revenue and aims to maintain margins above 20% by 2030. It sees a bidding pipeline of nearly ₹14,000 crores over the next 4 years.
#3 Data Patterns: The ₹20,000-crore ‘Growth Engine’ hidden in Su-30 upgrades
Data Patterns is mainly a vertically integrated defence and aerospace electronics solutions provider focused on radars, electronic warfare, communication systems, and avionics.
Airborne Radars: The SWIFT2000 and India’s ALH Opportunity
It has direct exposure to the Advanced Light Helicopter (ALH) program. The company has designed and developed the SWIFT2000, a compact, high-performance airborne radar system specifically for the ALH. Management views the ALH radar as a product with significant domestic and export potential.
The company has also actively developed communication systems, specifically the design of Land-Based Radio Relays and Radio Relays for Airborne Platforms and UAVs. Further, it is also exposed to Su-30 upgrade programs.
Su-30 Upgrades: Tapping into a ₹20,000-crore Market Potential
Data Patterns is developing the Multi-Function Fire Control Radar (FCR) for the Su-30, which uses active phased-array technology. The FCR is in development, and the company notes that it will take time for this to translate into recognized order potential. The timeline could extend to the next 2-3 years–a timeline required for certifications and flight testing.
Management views the Su-30 upgrade programs as some of its most significant future growth engines. It has invested in three large development facilities, which are expected to unlock a market potential of ₹15,000 to ₹20,000 crores.
Additionally, the company is manufacturing modern Electronic Warfare suites for the Su-30, including radar warning receivers and TALON SHIELD Airborne Wideband Jammer Pods. While initial upgrade contracts for 84 aircraft went to HAL, Data Patterns expects separate inquiries for 100 sets of these jammer pods.
The company anticipates these upgrades could translate into significant orders. Data Patterns has developed the Air Defence Fire Control Radar. This is a ground-based air defense system equipped with an X-Band Search Radar and a Ka-Band Track Radar, designed to protect against short and very short-range air threats.
Naval Defense and Electronic Warfare: Navigating Long-Lead Cycles
Data Patterns is also attempting to address the market for Navy upgrades by offering electronic warfare suites, infrared search-and-track sensors, and modern gun-control radars for ships. It states that it typically takes over two years just to prove a new system on a ship and generate inquiries.
Valuation Verdict: Strong ROE vs. Premium Pricing
Data Patterns return ratios (Return on Capital Employed and Return on Equity) are the strongest among all three, followed by AXISCADES and Apollo. Valuation-wise, all three companies are trading at a premium to both historical and 5-year industry median multiples.
| Valuation Comparison (X) | ||||
| Company | P/E | 5Y Median P/E | RoCE (%) | RoE (%) |
| Apollo Micro | 92 | 61 | 14.0 | 10.0 |
| Axiscades | 66 | 40.0 | 13.8 | 12.7 |
| Data Patterns | 75 | 69.0 | 21.0 | 15.2 |
| Industry Median | 57.5 | – | 18.7 | 14.4 |
The approval of defence projects worth ₹2.38 lakh crore spanning from missile manufacturers to electronics suppliers provides a major boost to the entire defence ecosystem. The order inflow (if materialised) could support the company’s declining order book and thus valuations
However, execution and order inflow remain key. Meanwhile, keep them in your watchlist to see how the opportunity unfolds.
Disclaimer
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted, and widely used 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.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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