Defence stocks: broker targets after ₹79,000 cr DAC push

Defence stocks back in focus after fresh approvals

Defence sector stocks were back in the spotlight after multiple brokerages responded to recent Defence Acquisition Council (DAC) clearances and the broader pipeline of Acceptance of Necessity (AoN) approvals. One brokerage note highlighted that the latest AoN tranche reinforces themes such as deeper air defence layering, accelerated unmanned and ISR capabilities, and sustained localisation through the Buy and Make route. Another set of updates framed the approvals as supportive for order inflows over the next two to four years, particularly for public sector defence companies and select private players. The coverage also comes at a time when, despite headline procurement momentum, some defence shares were described as trading close to 52-week lows in a separate market note. Against that backdrop, broker reports leaned heavily on order book visibility, policy-led demand, and execution positioning.

What the AoN and DAC clearances signalled

The AoN approvals were cited at roughly ₹670,000 crore. Separately, DAC-approved proposals were reported at ₹79,000 crore to enhance operational capabilities of the armed forces. A Hindi market note also said the DAC cleared proposals worth ₹238,000 crore last week and referenced the S-400 missile system among them. Taken together, the notes positioned the approvals as part of a sustained procurement pipeline rather than a one-off event.

A Motilal Oswal update, issued after winter-session clearances, said FY26 year-to-date defence capital approvals have reached ₹330,000 crore, nearly double the annual defence capital outlay of ₹180,000 crore. The brokerage said the scale and breadth of clearances are expected to de-risk future order inflows for key listed names over the next two to four years.

B&K Securities: Buy on BEL and HAL, Hold on BDL

B&K Securities said the AoN tranche reinforces key operating themes across the sector. In the same note, it suggested a Buy on Bharat Electronics (BEL) and Hindustan Aeronautics (HAL), and a Hold on Bharat Dynamics (BDL). B&K cited a target price of ₹513 for BEL, based on 45 times December 2027 earnings, and ₹1,278 for BDL, based on 42 times December 2027 earnings. It also kept a Buy rating on HAL with an unchanged target price of ₹5,467, based on 34 times December 2027 earnings.

The emphasis in the note was not limited to product categories, but also to how procurement is structured, including the role of domestic sourcing and manufacturing under Buy and Make. For investors, the takeaway was that multiple capability areas are being funded in parallel, which can widen the opportunity set beyond a single platform cycle.

Motilal Oswal: Buy on BEL, HAL, BDL and AMPL

Motilal Oswal maintained a Buy rating on BEL, HAL, BDL and Astra Microwave Products (AMPL), while retaining a Neutral view on Zen Technologies. In a target-price framework shared in the coverage, the brokerage assigned:

• BEL target ₹500 versus CMP ₹393, implying upside of 27.2%
• HAL target ₹5,800 versus CMP ₹4,377, implying upside of 32.5%
• BDL target ₹2,000 versus CMP ₹1,473, implying upside of 35.8%
• AMPL target ₹1,100 versus CMP ₹979, implying upside of 12.35%
• Zen Technologies target ₹1,400 versus CMP ₹1,386, implying limited upside of about 1%

The same coverage linked this positioning to the expanding procurement pipeline and the breadth of approvals across categories.

Order books remain a central data point

Several notes highlighted order book size relative to revenue as an indicator of near- to medium-term visibility. The following figures were cited for selected defence names.

Higher ratios do not automatically translate to faster earnings growth, but the broker discussion used them to frame execution runways and potential order conversion over multiple years.

Mazagon Dock and shipbuilders in brokerage focus

Mazagon Dock Shipbuilders Limited (MDL) was described as India’s premier warship and submarine builder and as a backbone of the naval defence manufacturing ecosystem. Sector coverage also referenced price action in MDL, noting its shares rose 12.26% to ₹2,317.25. Another market note cited MDL trading around ₹2,264, alongside targets from different brokerages.

Ashika suggested Buy on Mazagon Dock and GRSE with targets of ₹2,935 and ₹2,730, stating up to 42% upside, and it did not rate Cochin Shipyard. Antique, in separate coverage, maintained Buy ratings on several defence names including Mazagon Dock, HAL, BEL, BDL, Zen Technologies, Solar Industries and PTC Industries, and reiterated a constructive stance on the sector.

Target prices across brokerages: wide range, same theme

Across the compilation of notes, target prices varied by brokerage and methodology, but most were anchored around procurement visibility and order book expansion. A separate brokerage summary also mentioned a BDL target price of ₹1,900 with stated upside of 23%.

Budget expectations and stock positioning

A Hindi market note said India’s defence budget for FY26-27 is expected to rise 15.2% to ₹785,000 crore. The same note said that despite the procurement push, several defence shares were near 52-week lows, implying the sector was being watched for value opportunities. It also stated that HAL was a top expert preference, while noting BEL’s position in radar, communication systems and electronic warfare equipment. The note also referenced HAL’s revenue growth of 10.7% and profit growth of 29.6%, and BEL’s revenue growth of 23.7% and profit growth of 20.8%.

Why the developments matter for investors

The common thread across broker notes is that procurement approvals can translate into a more predictable order inflow environment, which is particularly relevant for companies with long manufacturing and delivery cycles. AoN and DAC signals also shape vendor planning, localisation strategies, and capacity decisions, which in turn influence execution risk. But the coverage also showed meaningful dispersion in targets for the same stock, reflecting differences in assumptions and valuation multiples.

For market participants, the near-term focus is likely to stay on how approvals convert into executable orders and how quickly firms can deliver against their existing order books. Several brokerages have already tied their calls to December 2027 earnings frameworks, indicating that the market debate is moving beyond immediate headlines toward multi-year delivery and margin outcomes.

Conclusion

Recent DAC clearances of ₹79,000 crore and AoN approvals cited at roughly ₹670,000 crore have driven a fresh round of brokerage updates on Indian defence stocks. B&K Securities reiterated Buy on BEL and HAL and maintained Hold on BDL, while Motilal Oswal kept Buy ratings on BEL, HAL, BDL and AMPL with a Neutral view on Zen Technologies. With budget expectations and order book visibility in focus, the next key milestones will be further conversion of approvals into orders and company execution updates over the coming quarters.