Defence Stocks Soar: BEL, HAL, BDL Eye 32% Gains

Motilal Oswal has identified Bharat Electronics, Hindustan Aeronautics, and Bharat Dynamics as its premier investment choices within the defence sector, projecting potential gains of up to 32%. This optimistic forecast stems from a confluence of factors, including robust domestic procurement, which now constitutes 75% of the FY26 budget, and a significant uptick in international interest for Indian defence products. The brokerage emphasizes that these companies are well-positioned to capitalize on this dual demand.

Significant capacity expansions are underway across the sector, with aircraft production lines being scaled up, radar and electronics facilities enhanced, and missile plants adding new units for critical components. Shipyards are also investing in infrastructure to support larger orders. These long-term projects align with the substantial order books already secured, providing a stable foundation for future revenue growth. The increasing focus on indigenous manufacturing is also expected to lift profit margins.

Specific analysis for each company reveals strong fundamentals. Bharat Electronics is noted for its role in radar and electronic warfare, with an expected revenue of Rs 27,667 crore in FY26. Hindustan Aeronautics benefits from a large order for 97 Tejas Mk1A aircraft and robust MRO revenue. Bharat Dynamics, with its missile and air-defence systems, sees the highest upside potential of 32%, driven by ongoing orders and new capacity additions.