DAC, chaired by Union Defence Minister Rajnath Singh, granted approval for various proposals, including S-400 long range surface-to-air missile system and overhaul of Su-30 aero engine aggregates. Thus, AoN for 55 proposals amounting to Rs 6.73 lakh crore has been accorded by the DAC in the financial year 2026.
Motilal Oswal Financial Services said that the approvals focus on enhancing surveillance, combat and long-range strike capabilities across army, air force and coast guard. These orders will be procured through imports as well as indigenization and provide a healthy addressable market for domestic players too, the domestic brokerage said.
“Defense companies already have strong order books and can benefit incrementally from export opportunities. Near-term challenges may be seen in the procurement of imported components, while the focus on indigenization is continuously reducing dependence on imports. We maintain our positive stance on the defense sector, and within our coverage universe, Bharat Electronics remains our top pick,” it added.
B&K Securities meanwhile said that the tranche of approvals meaningfully strengthens India’s airlift capability (MTA), deepens layered air defence and accelerates the shift towards unmanned warfare. “Importantly, the ‘Buy & Make’ structure across some platforms indicates sustained localisation tailwinds for the domestic ecosystem over the medium term, despite initial foreign OEM dependence in select segments. This latest round of approval takes the total for FY26 to Rs 9.28 trn. Capital procurement contracts worth Rs 2.28 trn have been signed in the current fiscal. Both these are record highs,” it said.
The domestic brokerage said that the Acceptance of Necessity (AoN) provides comfort regarding order inflows for players across the ecosystem over the medium term. Growth in the defence budget, particularly capital outlay, also augurs well for the broader defence and aerospace ecosystem.
Defence stocks to buy
According to Motilal Oswal, Bharat Electronics (BEL) is well positioned to benefit in the near term. “The Indian Navy’s next-generation corvette program, which has received CCS approval and is estimated to be worth ~Rs 400b for eight ships. The order will first be given to GRSE (L1) for five ships and Goa Shipyard (L2), after which BEL will secure orders for the electronic suites and onboard defense systems,” the brokerage said. It maintained its estimates and reiterated its ‘Buy’ rating on the stock, with a target price of Rs 520 apiece. This implies an upside potential of nearly 28.5% from the stock’s previous closing price.For Hindustan Aeronautics (HAL), Motilal maintained its ‘Buy’ rating with a target price of Rs 5,500 apiece. This implies an upside potential of more than 53% from the stock’s previous closing price. The domestic brokerage also held ‘Buy’ call for Bharat Dynamics (BDL) and Astra Microwave shares, but a ‘Neutral’ rating for Zen Technologies.
B&K Securities, meanwhile, held a ‘Buy’ rating for HAL and BEL shares, but a ‘Hold’ call for BDL.
Defence stocks tumble today amid broader market weakness
The shares of Indian defence companies like Cochin Shipyard, Bharat Forge, Bharat Dynamics and others dropped up to 5% amid broader market weakness on Monday.
Axiscades Technologies and Mtar Technologies shares sank around 5%, while Zen Technologies shares tumbled nearly 4%. Cochin Shipyard, Bharat Forge, Bharat Dynamics (BDL), Hindustan Aeronautics (HAL) and others dropped up to 3%, while Bharat Electronics traded with marginal gains. The sharp drop in the share prices pushed the Nifty India Defence index down more than 1.5% on Monday.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)