BEL, HAL, BDL shares: Targets for defence stocks after Rs 1.1 lakh crore DAC approvals

Motilal Oswal Financial Services Ltd (MOFSL) on Tuesday said it remained positive on the defence sector after the Defence Acquisition Council (DAC) approved Acceptance of Necessity proposals worth Rs 1.1 lakh crore for the Army, Navy and Air Force. The brokerage said the approvals, made in line with Atmanirbhar Bharat in defence, were focused on battlefield mobility, mine warfare, CBRN protection, electronic warfare, surveillance and naval propulsion, with 98 per cent of the total approvals earmarked for Indian industry.

MOFSL said DAC approvals in FY27 so far stood at Rs 1.62 lakh crore, while approvals worth Rs 13 lakh crore had been accorded for the Indian defence sector over FY25 to year-to-date FY27, expanding the total addressable market for domestic players. It also said the government had been taking steps to open missile production to Indian private players, which improved order inflow visibility for the sector. “In the near to medium term, finalisation of large tenders for defence PSUs should be keenly watched out for. We reiterate our positive stance on the sector and maintain Bharat Electronics (BEL) as our preferred pick,” MOFSL said.

The brokerage said the latest DAC approvals were granted on 7 September 2026 and covered capital procurement proposals worth around Rs 1.1 lakh crore. For the Army, the approvals included chemical, biological, radiological and nuclear recce vehicles capable of detecting, identifying, monitoring and marking CBRN-agent contaminated areas; high mobility vehicles to improve operational capability, logistics support and mobility; self-propelled mechanical mine layers for fast and responsive minelaying; advanced light helicopters for complex missions across terrains; and trawl tanks and the Sarvatra Bridge System.

For the Navy, the clearances covered Arudhra radars to replace existing air route surveillance radars at various Naval Air Stations, along with the design, development and subsequent procurement of marine gas turbines and a warship propulsion system, which MOFSL said would reduce dependence on foreign vendors. For the Air Force, the approvals covered multiple proposals aimed at enhancing the war-fighting capability of fighters, transport aircraft and helicopters. Approval was also granted for ground-based multi-purpose jammers to provide effective jamming against adversary radars, and for the installation of the Defence Forces Secure Access Card system to replace paper-based identity cards, passes and permits.

BEL, HAL, BDL target prices

On stock calls, MOFSL said Bharat Electronics Ltd (BEL) was trading at 42.2 times, 36.2 times and 32.2 times estimated FY27, FY28 and FY29 earnings per share, respectively. It maintained its estimates and reiterated a buy rating with an unchanged target price of Rs 530, based on 45 times two-year forward earnings.

Hindustan Aeronautics Ltd (HAL) was stated to be trading at 32.4 times, 27.0 times and 22.3 times estimated FY27, FY28 and FY29 earnings per share, and the brokerage reiterated a buy rating with an unchanged target price of Rs 5,800, based on the average of DCF and 30 times two-year forward earnings.

MOFSL said Bharat Dynamics Ltd (BDL) was trading at 68.4 times, 46.7 times and 37 times FY27, FY28 and FY29 estimated earnings per share, and it maintained a neutral rating with an unchanged target price of Rs 1,270, based on 42 times two-year forward earnings.

Astra Microwave, Zen Tech targets

Astra Microwave Products Ltd was stated to be trading at 66.3 times, 48.5 times and 34.4 times FY27E, FY28E and FY29E earnings per share, with MOFSL reiterating a buy rating and an unchanged target price of Rs 1,900, based on 42 times two-year forward earnings.

Zen Tech was said to be trading at 53.5 times, 38.2 times and 30.5 times FY27E, FY28E and FY29E earnings per share, and the brokerage maintained a neutral rating with an unchanged target price of Rs 1,600, based on 30 times two-year forward earnings.