Defence stocks to buy: HAL, Solar Industries, Astra Microwave among top picks of analysts

Domestic brokerage firms including Anand Rathi Share & Stock Brokers and Motilal Oswal Financial Services (MOFSL) continue to remain positive on select defence counters. The former one has picked Hindustan Aeronautics (HAL) and Solar Industries India, while the latter has initiated coverage on Astra Microwave Products.

According to Anand Rathi, India’s defence sector continues to demonstrate robust momentum, supported by significant indigenous projects and industry tie-ups. Hindustan Aeronautics (HAL) has revised its delivery schedules for the LCA Tejas Mk-1A and HTT-40 Trainer aircraft due to engine supply delays, with progress observed on domestic initiatives such as the UHM and Naval ALH programmes.

Collaboration has intensified as Solar Industries and NAL are jointly developing a 150kg loitering munition UAV, with work commencing on the Netra Mk-II Airborne Early Warning System. DRDO's VSHORADS man-portable air-defence system is nearing the end of trials, while the Indian Army is advancing proposals for long-range Pinaka rocket systems, said the brokerage.

Industry partnerships have expanded, with Tata and Lockheed Martin planning a C130J transport aircraft maintenance facility, and Mazagon Dock entering a tripartite agreement with the Indian and Brazilian Navies for submarine servicing. According to Anand Rathi, the Defence Acquisition Council has approved projects exceeding Rs 2.5 trillion YTD, ahead of previous years’ clearances.

Order inflow trends remain strong, reflecting sustained momentum in defence production and procurement. Anand Rathi Share & Stock Brokers highlights that these developments, alongside major public and private sector collaborations, are likely to shape the future trajectory of Indian defence companies such as Hindustan Aeronautics and Solar Industries.

Anand Rathi has a 'buy' rating on Hindustan Aeronautics and Solar Industries India with a target price of Rs 5,950 and 17,859, hinting an upside potential of 38 per cent and 44 per cent, respectively.

Motilal Oswal has initiated coverage on Astra Microwave Products (AMPL), highlighting its shift from a subsystem provider to a complete system solutions player in India's defence electronics sector. The brokerage notes AMPL's focus on opportunities in AESA radar, Uttam radar, meteorological projects, repeat Navy orders, and counter-drone systems, with an order book of Rs 22 billion as of September 30, 2025.

AMPL posted a 13 per cent revenue CAGR during FY21-25, with EBITDA margins rising to 25.6 per cent in FY25 from 12.3 per cent in FY21. Motilal Oswal projects AMPL's revenue to grow at an 18 per cent CAGR over FY25-28 and expects margins to reach around 26 per cent by FY28. The report estimates a PAT CAGR of 23 per cent for the same period, said the brokerage firm.

AMPL's performance is supported by its strong order book and improved profitability. MOFSL highlights that AMPL is positioned to benefit from upcoming defence contracts and a changing business mix. Future performance will depend on new order inflows and continued margin improvement, with the brokerage maintaining a positive outlook based on recent trends and projected growth.

Motilal Oswal assigns a 'buy' rating and sets a target price of Rs 1,100, valuing the company at 38 times December 2027 estimates, at a discount to larger defence PSUs. The brokerage considers AMPL a long-term investment, with expectations of revenue acceleration as larger orders are awarded by the Ministry of Defence and defence PSUs.