BEL, BEML, Mazagon Dock, HAL: Defence stocks to buy; check targets, Q4 preview
Nirmal Bang Institutional Equities expects a stable Q4FY26 for the Indian defence sector, driven by backend-loaded execution across Defence Public Sector Undertakings and private players.
- Apr 9, 2026,
- Updated Apr 9, 2026 3:58 PM IST
Nirmal Bang Institutional Equities expects a stable Q4FY26 for the Indian defence sector, driven by backend-loaded execution across Defence Public Sector Undertakings (DPSUs) and private players. The report highlights a pickup in deliveries of key platforms and subsystems, with operating leverage likely to support margins after a muted first half.
Revenue growth for Q4FY26 across the defence universe is estimated at around 4 per cent year-on-year. This growth is supported by strong order books and improving execution trends. According to Nirmal Bang, key outperformers in this period are expected to include Solar Industries India Ltd, Paras Defence and Space Technologies Ltd, and BEML Ltd.
The report notes that DPSUs continue to maintain a healthy book-to-bill ratio of approximately four times, ensuring strong revenue visibility over the medium term. The focus is shifting from order inflows to execution efficiency. Increasing indigenisation, technology transfers with global original equipment manufacturers (OEMs), and a gradual reduction in import dependency are anticipated to improve supply chains and reduce execution delays, states Nirmal Bang.
Barring Datta Patterns, Nirmal Bang has trimmed target prices for other defence companies by up to 22 per cent, with Hindustan Aeronautics seeing the biggest cut. However, it has a 'buy' rating on all defence stocks now, including Bharat Dynamics which has been upgraded.
Policy support remains strong, with FY26 witnessing robust ordering activity that reinforces long-term growth prospects. Acceptance of Necessity (AoN) approvals stand at roughly Rs 6.7 trillion. Nirmal Bang points out that this pipeline provides multi-year revenue visibility for major integrators such as Hindustan Aeronautics Ltd, Bharat Electronics Ltd, and Bharat Dynamics Ltd.
Defence electronics is identified by Nirmal Bang as a key structural theme. The report remains positive on defence electronics companies due to increasing electronic content across platforms. Beneficiaries include Bharat Electronics Ltd as a system integrator, along with Astra Microwave Products Ltd and Data Patterns (India) Ltd as subsystem providers. Nirmal Bang highlights a gradual transition of subsystem players toward Tier-1 supplier status, which could enable margin expansion and a larger share of the value chain.
Near-term risks persist despite the positive outlook. These include execution delays in large programmes, dependence on global supply chains for critical components such as engines and electronics, and timing mismatches between approvals and actual order inflows. Nirmal Bang notes these risks as factors to monitor closely.
Regarding the sector outlook, Nirmal Bang maintains a broadly constructive stance but has moderately cut earnings estimates, target prices, and valuation multiples. This adjustment factors in recent market corrections and near-term risks. Defence stocks have declined by approximately 10–20 per cent over the past month, reflecting valuation normalization and broader market weakness despite elevated geopolitical tensions.
The ongoing Iran–Israel conflict adds uncertainty, especially on the supply chain front, with potential disruptions in key routes like the Strait of Hormuz. Rising energy prices and shortages of critical inputs are impacting global defence manufacturing. These factors are already causing delays in component supplies and higher input costs. Elevated oil prices may further affect margins through increased logistics and input expenses.
While geopolitics remains a long-term positive for defence spending, near-term impacts are mixed, with execution risks and cost pressures affecting earnings visibility. Overall, Nirmal Bang concludes that the long-term story remains intact, but near-term headwinds require a calibrated approach to estimates and valuations.
Nirmal Bang has a target price of Rs 1,139 on Astra Microwave, Rs 1,434 on Bharat Dynamics, Rs 494 on Bharat Electronics, Rs 2,000 on BEML, Rs 3,732 on Data Patterns, Rs 4,530 on Hindustan Aeronautics, Rs 3,056 on Mazagon Dock, Rs 811 on Paras Defence and Rs 15,940 on Solar Industries.
Nirmal Bang Institutional Equities expects a stable Q4FY26 for the Indian defence sector, driven by backend-loaded execution across Defence Public Sector Undertakings (DPSUs) and private players. The report highlights a pickup in deliveries of key platforms and subsystems, with operating leverage likely to support margins after a muted first half.
Revenue growth for Q4FY26 across the defence universe is estimated at around 4 per cent year-on-year. This growth is supported by strong order books and improving execution trends. According to Nirmal Bang, key outperformers in this period are expected to include Solar Industries India Ltd, Paras Defence and Space Technologies Ltd, and BEML Ltd.
The report notes that DPSUs continue to maintain a healthy book-to-bill ratio of approximately four times, ensuring strong revenue visibility over the medium term. The focus is shifting from order inflows to execution efficiency. Increasing indigenisation, technology transfers with global original equipment manufacturers (OEMs), and a gradual reduction in import dependency are anticipated to improve supply chains and reduce execution delays, states Nirmal Bang.
Barring Datta Patterns, Nirmal Bang has trimmed target prices for other defence companies by up to 22 per cent, with Hindustan Aeronautics seeing the biggest cut. However, it has a 'buy' rating on all defence stocks now, including Bharat Dynamics which has been upgraded.
Policy support remains strong, with FY26 witnessing robust ordering activity that reinforces long-term growth prospects. Acceptance of Necessity (AoN) approvals stand at roughly Rs 6.7 trillion. Nirmal Bang points out that this pipeline provides multi-year revenue visibility for major integrators such as Hindustan Aeronautics Ltd, Bharat Electronics Ltd, and Bharat Dynamics Ltd.
Defence electronics is identified by Nirmal Bang as a key structural theme. The report remains positive on defence electronics companies due to increasing electronic content across platforms. Beneficiaries include Bharat Electronics Ltd as a system integrator, along with Astra Microwave Products Ltd and Data Patterns (India) Ltd as subsystem providers. Nirmal Bang highlights a gradual transition of subsystem players toward Tier-1 supplier status, which could enable margin expansion and a larger share of the value chain.
Near-term risks persist despite the positive outlook. These include execution delays in large programmes, dependence on global supply chains for critical components such as engines and electronics, and timing mismatches between approvals and actual order inflows. Nirmal Bang notes these risks as factors to monitor closely.
Regarding the sector outlook, Nirmal Bang maintains a broadly constructive stance but has moderately cut earnings estimates, target prices, and valuation multiples. This adjustment factors in recent market corrections and near-term risks. Defence stocks have declined by approximately 10–20 per cent over the past month, reflecting valuation normalization and broader market weakness despite elevated geopolitical tensions.
The ongoing Iran–Israel conflict adds uncertainty, especially on the supply chain front, with potential disruptions in key routes like the Strait of Hormuz. Rising energy prices and shortages of critical inputs are impacting global defence manufacturing. These factors are already causing delays in component supplies and higher input costs. Elevated oil prices may further affect margins through increased logistics and input expenses.
While geopolitics remains a long-term positive for defence spending, near-term impacts are mixed, with execution risks and cost pressures affecting earnings visibility. Overall, Nirmal Bang concludes that the long-term story remains intact, but near-term headwinds require a calibrated approach to estimates and valuations.
Nirmal Bang has a target price of Rs 1,139 on Astra Microwave, Rs 1,434 on Bharat Dynamics, Rs 494 on Bharat Electronics, Rs 2,000 on BEML, Rs 3,732 on Data Patterns, Rs 4,530 on Hindustan Aeronautics, Rs 3,056 on Mazagon Dock, Rs 811 on Paras Defence and Rs 15,940 on Solar Industries.