HAL, Astra Microwave, Solar Industries shares: Here's Anand Rathi's top defence stock pick
The brokerage said the listed defence universe continues to have robust order books, exceeding Rs 3 lakh crore across platform companies, including HAL and the three listed shipyards.
- Aug 25, 2026,
- Updated Aug 25, 2026 12:31 PM IST
Hindustan Aeronautics Ltd (HAL) is Anand Rathi's top pick in the defence sector, with the brokerage maintaining a 'Buy' rating on the defence PSU stock. The domestic brokerage retained its 'Hold' rating on Solar Industries India Ltd and Astra Microwave Products Ltd following their recent run-up. Anand Rathi said Q1FY27 results reinforced its structurally positive view on India's defence manufacturing cycle, although the focus is now shifting towards execution, order conversion and valuations.
The domestic brokerage said the listed defence universe continued to have robust order books, exceeding Rs 3 lakh crore across platform companies, including HAL and the three listed shipyards. It also noted that programmes such as P-75 (I), LCA Mk-1A and Next Generation Corvettes are progressing towards the serial production stage.
However, Anand Rathi said: "earnings delivery remains uneven, while large platform awards carry long execution timelines and the sharp re-rating across several defence stocks has already priced in a meaningful part of the medium-term opportunity".
For now, Anand Rathi suggested a target of Rs 5,431 on HAL. It gave targets of Rs 1,767 on Astra Microware and Rs 19,907 on Solar Industries.
Within its coverage universe, the brokerage said HAL remains its top pick, supported by stronger earnings visibility, a broad platform-level order pipeline and the most attractive risk-reward based on its DCF valuation.
The brokerage highlighted divergent execution across companies. Consolidated revenue of Garden Reach Shipbuilders & Engineers (GRSE), Bharat Electronics (BEL), BEML and Apollo Micro Systems grew 39 per cent, 25 per cent, 29 per cent and 88 per cent year-on-year, respectively, while ideaForge recovered sharply from a weak base. On the other hand, Astra Microwave, Zen Technologies and Data Patterns reported softer execution or margins, largely due to inspection delays, programme approvals, order maturity and fixed-cost absorption rather than weaker underlying demand.
Anand Rathi also highlighted "increasing inter-dependency among listed defence companies, with QRSAM being a key example. BEL acts as the system integrator, while its award creates opportunities for Bharat Dynamics, Apollo Micro Systems, Astra Microwave and BEML. Astra expects another Rs 700-800 crore from the first three regiments, while BEML sees a Rs 600-700 crore vehicle opportunity".
Beyond QRSAM, the sector pipeline includes AMCA, Su-30 Virupaksha/Angad upgrades, Uttam AESA, MIGM, NextGen Corvettes, P-17 Bravo, MCMVs, LPDs and drone/counter-drone programmes.
Hindustan Aeronautics Ltd (HAL) is Anand Rathi's top pick in the defence sector, with the brokerage maintaining a 'Buy' rating on the defence PSU stock. The domestic brokerage retained its 'Hold' rating on Solar Industries India Ltd and Astra Microwave Products Ltd following their recent run-up. Anand Rathi said Q1FY27 results reinforced its structurally positive view on India's defence manufacturing cycle, although the focus is now shifting towards execution, order conversion and valuations.
The domestic brokerage said the listed defence universe continued to have robust order books, exceeding Rs 3 lakh crore across platform companies, including HAL and the three listed shipyards. It also noted that programmes such as P-75 (I), LCA Mk-1A and Next Generation Corvettes are progressing towards the serial production stage.
However, Anand Rathi said: "earnings delivery remains uneven, while large platform awards carry long execution timelines and the sharp re-rating across several defence stocks has already priced in a meaningful part of the medium-term opportunity".
For now, Anand Rathi suggested a target of Rs 5,431 on HAL. It gave targets of Rs 1,767 on Astra Microware and Rs 19,907 on Solar Industries.
Within its coverage universe, the brokerage said HAL remains its top pick, supported by stronger earnings visibility, a broad platform-level order pipeline and the most attractive risk-reward based on its DCF valuation.
The brokerage highlighted divergent execution across companies. Consolidated revenue of Garden Reach Shipbuilders & Engineers (GRSE), Bharat Electronics (BEL), BEML and Apollo Micro Systems grew 39 per cent, 25 per cent, 29 per cent and 88 per cent year-on-year, respectively, while ideaForge recovered sharply from a weak base. On the other hand, Astra Microwave, Zen Technologies and Data Patterns reported softer execution or margins, largely due to inspection delays, programme approvals, order maturity and fixed-cost absorption rather than weaker underlying demand.
Anand Rathi also highlighted "increasing inter-dependency among listed defence companies, with QRSAM being a key example. BEL acts as the system integrator, while its award creates opportunities for Bharat Dynamics, Apollo Micro Systems, Astra Microwave and BEML. Astra expects another Rs 700-800 crore from the first three regiments, while BEML sees a Rs 600-700 crore vehicle opportunity".
Beyond QRSAM, the sector pipeline includes AMCA, Su-30 Virupaksha/Angad upgrades, Uttam AESA, MIGM, NextGen Corvettes, P-17 Bravo, MCMVs, LPDs and drone/counter-drone programmes.