India's Defense Boom: Orders Surge Amidst Indigenisation

India's defense manufacturing sector is currently experiencing a strong, multi-year upcycle characterized by substantial order books, record procurement approvals, and a growing emphasis on indigenisation and exports. Analysts observe this as one of the most robust demand environments in decades, with many defense companies holding contracted orders equivalent to two to five times their annual revenues.

While public sector undertakings continue to lead with large, long-duration platform orders, private players are rapidly expanding their capabilities in electronic subsystems, unmanned aerial platforms, and export-linked programs. The quality of order books, focusing on visibility and subsystem intensity, is now prioritized over sheer volume. Sector-wide backlogs are poised for further expansion following nearly ₹3 trillion in defense procurement approvals cleared in 2025.

Elevated valuations for defense companies are considered justified as the sector transitions from a cyclical manufacturing play to a structural, long-duration growth story. Private firms, in particular, command premium valuations due to higher margins and faster execution, while public sector undertakings offer stability. Despite some short-term earnings volatility tied to milestone-driven execution, the sector sentiment remains strong for the next five years.