India’s drone sector is seeing steady growth. According to a recent release by the Press Information Bureau, as of February 2026, India has more than 38,000 drones registered in the country. Nearly 40,000 remote pilots have been certified. Over 240 training organisations are approved. The regulatory system is gradually taking shape.
From border security to Bharat: The civil drone expansion
Drones are also being used on the ground. Under the SVAMITVA scheme, 3.3 lakh villages have been surveyed using drone mapping. 2.8 crore property cards have been prepared for 1.8 lakh villages across 31 states. In agriculture, women’s self-help groups have received drones to support spraying and crop monitoring. Adoption is no longer limited to defence.
This makes the sector worth watching. Policy support is visible. Domestic manufacturing is being encouraged. Import dependence is reducing. Many businesses are still at an early stage. That leaves room for growth, but also calls for caution.
The 2026 Drone watchlist: Selection criteria
For this article, we have focused on companies with real linkages to the drone ecosystem. The selection is based on manufacturing strength, technology capability and balance sheet stability. We have avoided names where exposure is only symbolic. The aim is to highlight businesses where drones can meaningfully impact performance. We excluded ideaForge Technology on account of its financials.
#1 Paras defence and space technologies: Dominating the optics and drone electronics space
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.
Strategic focus: From optics to heavy-lift drones
The company caters to four major segments – defence & space optics, defence electronics, heavy engineering and electromagnetic pulse protection solutions. The company has also developed counter-drone and anti-drone solutions, positioning it within India’s emerging drone and aerial defence ecosystem.
Paras Defence and Space Technologies posted healthy growth in the December quarter, helped by steady execution across its core defence businesses.
Q3 FY26 Performance: Paras defence revenue and profit growth
Consolidated revenue for Q3 FY26 came in at Rs 106 crore, up 24% as compared to same quarter last year. Net profit attributable to owners rose 21% to Rs 18 crore. The increase reflects improved scale and better contribution from key segments. The growth is supported by execution in high-value defence programmes, particularly in optics and electronics, areas that remain central to surveillance and anti-drone architectures.
Optics and optronic systems remained a strong contributor. Defence engineering, which includes electronics and heavy engineering solutions, also supported growth. Both divisions continue to cater to high-value programmes in the defence and aerospace space.
Strategic expansion: Moving up the aerospace value chain
The company has also formalised its aviation focus through the incorporation of a new subsidiary, Paras Avionics Private Limited, which will engage in systems and solutions for avionic applications, including manufacturing, testing, repair and overhauling for defence and aerospace platforms. This is not a cosmetic expansion. It signals a structural move up the aerospace value chain, where avionics integration plays a key role in unmanned aerial systems.
What makes the company relevant to the drone ecosystem is not branding but capability. Counter-UAS systems depend on electro-optics, tracking systems, and electronic integration. These are established strengths within its portfolio. With rising government emphasis on indigenised aerial defence systems and layered airspace security, companies that control these enabling technologies are strategically positioned.
With government spending on indigenisation rising, the company’s execution and order flow will be closely tracked in the coming quarters.
In the past year, share price of Paras Defence and Space Technologies rallied 43.8%.
Paras Defence and Space Technologies 1 Year Share Price Chart
#2 Zen Technologies: A leader in counter-drone and simulation tech
Zen Technologies was incorporated in 1996. The company designs develop and manufacture 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.
Beyond equipment: Building integrated training ecosystems
What differentiates Zen is that it is not just supplying equipment, but building integrated training and operational ecosystems. Its portfolio spans anti-drone systems, loitering munitions, ISR systems, live and virtual simulation, naval simulation, electronic warfare and automated weapon stations.
Financial Resilience: Margin stability amid procurement delays
Zen Technologies posted a steady performance in the December quarter, even as some procurement orders were delayed. Consolidated revenue for Q3 FY26 rose 16.8% over the past year to Rs 177.8 crore. Net profit increased 38% to Rs 54.8 over the last year.
Despite revenue timing delays, profitability remained strong, supported by a favourable product mix and cost discipline. EBITDA margins stood above 46% during the quarter, reflecting the high-value nature of its solutions rather than commoditised hardware supply. Margin resilience during procurement slowdowns is a detail that often gets ignored but is crucial in defence businesses.
Order Book Visibility: Domestic demand and lifecycle upgrades
The quarter saw strong order activity. During the quarter, Zen added orders worth Rs 585.5 crore. As a result, its order book stood at Rs 1,082.8 crore at the end of December 2025. Most of these contracts are expected to be delivered in FY27.
Importantly, the closing order book shows Rs 95.4 crore in exports and Rs 987.4 crore in domestic orders. This implies that a primary driver of the current visibility is the need for internal defense, which is consistent with the government’s goal of indigenization.
Key additions included a Rs 245 crore contract for upgrading anti-drone systems. The anti-drone upgrade contract is strategically important because it relates to system enhancement rather than first-time installation.
Upgradation contracts typically imply lifecycle stickiness and recurring technology refresh cycles. In evolving aerial threat environments, counter-drone systems require continuous software, detection and hard-kill upgrades. This makes it possible for continuous interaction in addition to one-time capital transfers. The emphasis is now on timely execution and delivery as defence budget rises.
The company also received a Rs 102 crore order for its Combat Training Node platform. Hard-kill capability marks a shift from detection-only systems to kinetic neutralisation. This is a higher-complexity segment within the counter-UAS domain. Entry barriers are materially higher compared to soft-kill jamming solutions.
Towards the end of the quarter, the company completed the acquisition of a 76% stake in Anawave Systems and Solutions Private Limited.
This acquisition expands Zen’s footprint in naval simulation and electronic warfare domains. When viewed together with its drone and anti-drone portfolio, it suggests a broader strategy of participating in integrated battlefield simulation, live training, and operational deployment ecosystems. That integration capability often determines long-term defence vendor relevance.
With a robust order pipeline, expanding capabilities and improving execution visibility into FY27, the company appears positioned not only as a counter-drone supplier, but as a broader defence technology integrator.
In the past year, share price of Zen Technologies rallied 21.5%.
Zen Technologies 1 Year Share Price Chart
Valuations
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 | Paras Defence and Technologies | 43.9 | 46.0 | 31.0 | 15.6% | 11.5 |
| 2 | Zen Technologies | 26.4 | 48.7 | 37.2% | 26.1% |
In terms of how efficiently money is being used in the business, Zen Technologies appears to be doing better right now. Its Return on Capital Employed (ROCE) stands at 37.2%, which reflects healthy returns from its simulation and anti-drone businesses. Paras Defence reported a ROCE of 15.6%. It spends more on equipment and facilities for making defence products. Because of that, money gets locked in the business for a longer time.
Valuations are mixed. Paras Defence is trading at 43.9 times EV/EBITDA, close to its five-year average of 46. Investors are still willing to pay higher price for the stock. Zen Technologies trades at 26.4 times EV/EBITDA, well below its five-year average of 48.7. That indicates the stock has cooled from earlier peaks.
Both companies operate in specialised defence segments where order visibility matters more than short-term earnings swings. Their performance will depend on steady order inflows, execution timelines and margin stability in a competitive procurement environment.
Conclusion
Defence companies usually move in cycles. Orders may look strong on paper, but revenue depends on delivery and timelines. One good quarter does not define the trend.
Paras Defence and Zen Technologies are both present in focused segments of this space. Their business mix is different, and so are their numbers. One is more manufacturing-led, the other more technology-led. That explains the gap in return ratios and valuations.
What really matters now is steady execution. Order books need to convert into revenue. Margins need to hold. Defence spending in India is rising, but procurement can slow at times.
For investors, it may make sense to track order inflows, capital efficiency and quarterly performance over the next few quarters before taking a firm view.
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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