India’s defence spending is increasingly shifting from conventional weapons to technologies designed for modern warfare. The latest approvals by the Defence Acquisition Council reflect that change.
The Council has approved capital acquisition proposals worth around ₹52,000 crore for various indigenous systems. These include anti-drone electronic warfare platforms, surface-to-air and anti-tank guided missiles, active protection systems for tanks, and jet-based kamikaze drones.
According to the Ministry of Defence, these procurements aim to strengthen the armed forces against emerging battlefield threats while advancing self-reliance in defence manufacturing. Notably, the proposal aligns with the government’s defence modernisation push in FY27.
Of the defence capital outlay of ₹1.8 lakh crore, about ₹1.49 lakh crore has been earmarked for acquiring new weapons, aircraft, warships, and other military hardware. This will strengthen the country’s ambitious goal of scaling up domestic defence production to ₹3 lakh crore (from ₹1.78 lakh crore in FY26) and defence exports to ₹50,000 crore (from ₹38,424 crore) by 2029.
This is expected to primarily benefit select listed defense companies operating within India’s missile, air defense, and unmanned systems ecosystem. This article examines three such prime beneficiaries.
#1 Bharat Electronics: The Market Leader in the Domestic Defence Electronics Sector
Bharat Electronics (BEL) is the market leader in India’s domestic defence electronics sector and a primary supplier to the Indian Armed Forces. This makes it strategically positioned to be a big beneficiary of these specific DAC approvals.
Electronic Warfare and Anti-Drone Tech: Driving Next-Gen Military Dominance
BEL is consolidating its market share in the electronic warfare and anti-drone segments. It has deployed the Drone Detection Deter and Destroy system and currently supplies Drone Guard Systems to the military.
To capitalize on the growing market for unmanned systems, BEL has established a dedicated Business Unit in Bengaluru. Currently, BEL is executing an order for electronic warfare suites for Mi-17 V5 helicopters valued at approximately ₹2,200 crore. Management expects near-term order inflows for the Shatrughat and Samghat electronic warfare solutions.
Armored Upgrades: Driving Breakthroughs in Main Battle Tank Electronics
The company is positioned to benefit directly from guided missile programs such as the Man-Portable Anti-Tank Guided Missile. This is because BEL is a strategic partner of the DRDO in the technology, engineering, and commercial production of Radio Frequency and Imaging Infrared seekers. The company has recently secured new orders within the seeker segment.
Further, air defence remains a primary revenue driver, with BEL serving as the Development cum Production Partner for various DRDO-led initiatives. To secure recurring, long-term service revenue, BEL established a JV with Israel Aerospace Industries named BEL IAI AeroSystems.
The ₹30,000 QRSAM Order Catalyst
This entity handles post-warranty lifecycle support for the Medium Range Surface-to-Air Missile (MRSAM) systems. The company already has a backlog of ₹3,500 crore orders for the Long Range Surface to Air Missile and the Ashwini radar project worth ₹2,460 crore. BEL anticipates a ₹30,000 crore order for the Quick Reaction Surface-to-Air Missile (QRSAM) program soon.
The Seeker Advantage: How DRDO Partnerships Secure Premium Component Margins
BEL is also present in tank electronics. It has successfully developed technology modules such as the indigenous infrared jammer for main battle tank Active Protection Systems. The company is currently executing the ₹2,800-crore BMP II upgrade program, which is slated for completion over the next two years.
BEL is also expanding its total addressable market in unmanned systems, precision-guided munitions, and smart weapons. The company collaborates with start-ups and foreign original equipment manufacturers to co-develop payloads, among other things. BEL also co-founded the UAS Testing Foundation to develop domestic testing infrastructure for unmanned systems.
Evaluating the Order Book Realities: Unpacking BEL’s ₹73,882-Crore Backlog
As of 31 March 2026, BEL’s total order book stood at ₹73,882 crore. This provides revenue visibility of over two years, as per FY26 revenue of ₹27,610. Further, management expects order inflow worth over ₹55,000 crore in FY27.
#2 Bharat Dynamics: Sovereign Defence Play Boasts 90% Indigenisation
Bharat Dynamics (BDL) is also positioned to be a primary beneficiary of this procurement. BDL achieves indigenisation levels of 80-90% on its missile systems. This ensures that it remains the primary domestic supplier for the army’s modernization needs. The MRSAM is a core product in BDL’s portfolio.
The company is already benefiting significantly from the procurement of MRSAM. In FY25, it secured orders worth approximately ₹6,668 crore for the supply of MRSAM, anti-tank guided missiles (ATGMs), and other weapon systems. Thus, India’s sustained focus on strengthening its air defence network continues to drive demand for MRSAMs.
V-SHORADS and Expansion: Capitalizing on Short-Range Air Defence
Further, BDL has anticipated the demand for very short-range air defence. To capitalise on this, it is setting up additional manufacturing facilities in Telangana, Maharashtra, and UP. This will be dedicated to the manufacturing of V-SHORADS, SAMs, rockets, and propellants.
The DAC’s approval for V-SHORADS means that these newly established manufacturing plants can see immediate capacity utilisation. Further, BDL is India’s leading manufacturer of anti-tank guided missiles (ATGMs), producing models such as the Milan-2T, Konkurs-M, Invar, and Nag.
Next-Gen ATGMs and Drone-Delivered Payloads: Diversifying the Core Portfolio
To this end, BDL has recently completed successful trials of new-generation ATGMs. If orders are secured, this product alignment implies an expected increase in the production volume of BDL’s ATGM division. Further, the company is also diversifying into drone-delivered payloads. This creates new opportunities for kamikaze/loitering munitions.
To counter hostile drones, BDL is also focusing on the indigenous development of critical defence technologies, which explicitly includes electronic warfare systems. This indicates that BDL is actively developing the technological base required for systems like the AKASH TARANG.
The Revenue Paradox: Reconciling BDL’s 10-Year Order Visibility with FY26 Drops
As of 31 March 2026, BDL’s order book stood at ₹26,176 crore, providing revenue visibility of over 10 years, based on FY26 revenue of ₹2,442 crore. The company anticipates strong demand, with approximately ₹15,000 crore worth of orders in the pipeline for FY27. However, execution is key for BDL, as despite a robust order book, revenue fell 27% in FY26.
#3 Solar Industries: The Pinaka Missiles Breakthrough
Another company, Solar Industries, is well-positioned to benefit from counter-drone warfare, loitering munitions, and indigenous missile systems. The push for a Jet-Based Kamikaze Drone System aligns perfectly with Solar’s flagship “Nagastra” family of loitering munitions.
The Nagastra Family: Scaling AI-Powered Loitering Munitions
Notably, it has delivered 480 units of the Nagastra-1. This is an indigenous precision-strike drone capable of neutralizing hostile targets in kamikaze mode across varied terrain and distances. Solar is also developing the Nagastra-2, with AI-powered target recognition and extended range. A prototype of the medium-range precision kill system, ‘Nagastra-3’, is also under development.
To counter the threat of hostile UAVs and drone swarms, which the Army plans to counter with systems like the AKASH TARANG, Solar has successfully tested its own hard-kill counter-drone system known as “Bhargavastra.” It aims to neutralize drone swarms using micro-missiles and micro-rockets.
Core Defence Integration: Warhead Tech, BrahMos, and Pinaka Propellants
Further, it contributes to the indigenous missile supply chain. Solar manufactures and supplies indigenous warhead technology for missiles and UAV payloads. It is a key supplier of composite propellants, including solid-propellant boosters for the BrahMos and Pinaka missiles. Solar also manufactures explosives and ammunition.
The Pinaka multiple rocket launcher system is a key product of Solar’s rapidly expanding defence portfolio. It recently secured a contract worth ₹6,084 crore from the Ministry of Defence to supply Pinaka Enhanced Range rockets and Area Denial Munitions. Solar is the first private firm in India to successfully test-fire Pinaka rockets that were designed and manufactured in-house.
Monetizing the Defence Backlog: Inside Solar’s 94% Segment Revenue Surge
Solar defence business is already seeing financial growth. Revenue from the defence segment nearly doubled in FY26, rising 94% year-on-year to a record ₹2,634 crore. Defence accounted for 27% of the company’s total revenue of ₹9,838 crore in FY26. Solar expects its defence revenue to cross ₹4,500 crore in FY27.
Out of the company’s total order book of over ₹21,300 crore, the defence segment accounts for ₹18,000 crore. Nearly 40% of the overall defence order book comprises export contracts. To meet rising defence orders, Solar plans to invest ₹2,050 crore in FY27.
Here’s a summary of where each of these companies is at this juncture:
| Particulars | BEL | BDL | Solar* |
| Revenue (₹ crore) | 27,610 | 2,442 | 2,634 |
| Order Book (₹ crore) | 73,882 | 26,176 | 18,000 |
| Revenue Visibility(In years) | 2.7 | 10.7 | 6.8 |
| Source: Management Commentaries and Investor Presentations (*Defence) | |||
The table shows that BEL leads in terms of order book and revenue, followed by BDL and Solar.
Structural Valuation: Returns Analysis vs Peer Averages
With superior profitability growth, Solar has a higher Return on Capital Employed (ROCE) and Return on Equity (ROE) than BEL and BDL. From a valuation perspective, BEL is trading at a discount to the industry’s median P/E, but is roughly in line with its 3-year historical median.
In contrast, Solar is trading in line with its historical valuation, though this is more than double the industry median. Among the three, BDL has the highest valuation, trading at a premium to both its historical average and the industry median.
| Peer Comparison (X) | |||||
Company | Price-to-Earnings Multiple | Return Ratios | |||
| Company | 3Y Median | Industry | ROCE (%) | ROE (%) | |
| BEL | 50.4 | 49.3 | 61.5 | 36.5 | 27.6 |
| BDL | 121.0 | 82.2 | 61.5 | 13.8 | 10.2 |
| Solar | 99.9 | 94.0 | 41.9 | 36.8 | 31.5 |
| Source: Screener.in (Data as of 03 July 2026) | |||||
The latest DAC approvals reaffirm India’s long-term commitment to military modernisation and indigenous defence manufacturing. While contracts will be awarded over time, companies with the required capabilities in electronic warfare, missile systems, and unmanned platforms are likely to remain at the forefront.
Among listed players, BEL, BDL, and Solar Industries could be best positioned to convert this procurement cycle into sustained order inflows and long-term earnings growth. That said, these names could be kept in your watchlist to track their execution.
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 was unavailable have we used an alternative, 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.
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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