HAL, BDL, BEL, Zen Tech, Mazagon Dock, GRSE, Astra Microwave, Solar: Defence stocks to buy

MOFSL, in a fresh note, said it maintained its selective stance on the capital goods sector and preferred companies that were able to grow in the current environment and sustain margins and profit growth. Among defence names, Bharat Electronics (BEL) remained its top pick. The brokerage also retained Buy ratings on Bharat Dynamics (BDL) and Hindustan Aeronautics (HAL), while keeping a 'Neutral' stance on Zen Technologies Ltd. On defence companies, MOFSL said revenue visibility remained strong, supported by healthy order books, whereas private capex-led businesses were yet to witness a broad-based pickup. “Defence players saw margin contraction due to lumpy execution, but full-year margins should improve as delivery schedules normalise and indigenisation gains traction,” MOFSL said. The brokerage said defence ordering was expected to improve further in H2FY26. Defence companies, it noted, highlighted a strengthening export pipeline, aided by rising enquiries for missiles, radars, naval platforms and ammunition. Management commentary remained positive, with expectations of a pickup in H2FY26 as tendering activity improved and regional demand visibility strengthened. For BDL, MOFSL said the company had a healthy order pipeline of about Rs 50,000 crore over the next five years, with nearly Rs 20,000 crore expected in the next two to three years. It recently secured Rs 2,000 crore of Invar missile orders and stood to benefit from upcoming opportunities in emergency procurement, QRSAM, follow-on Astra orders, VSHORADS and other key programmes. BEL’s long-term order pipeline also remained strong, supported by Rs 50,000 crore of opportunities from recent AoN approvals, Rs 1,300–1,500 crore of emergency procurement orders plus another Rs 2,000 crore in advanced stages, Rs 4,500/Rs 8,000 crore of next-generation corvette subsystems for FY26/FY27, Rs 2,500 crore of LCA Mk1A avionics, and the Rs 30,000 crore QRSAM order expected by 4QFY26. In HAL’s case, the MoD signed an Rs 62,400 crore contract with the company for 97 LCA Mk1A aircraft (68 single-seat, 29 twin-seat), with deliveries beginning in FY28 and completing over six years. The order had 64 per cent indigenous content, incorporating 67 new locally sourced components, including the UTTAM AESA radar, Swayam Raksha Kavach EW suite and indigenous actuators. “HAL also signed a $1 billion agreement with GE Aerospace for 113 F404 engines to support timely execution. Additionally, HAL expanded its Nashik line in October 2025, raising LCA production capacity from 16 to 24 aircraft annually,” MOFSL said. For Zen Technologies, MOFSL said order inflows remained muted in H1FY26 due to delays in simulator tenders and a shift in focus towards emergency procurements. However, orders were expected to pick up in H2FY26 as pending simulator orders worth Rs 650 crore and anti-drone tenders progressed. MOFSL suggested target prices of Rs 1,900 for BDL, Rs 500 for BEL, Rs 5,800 for HAL and Rs 1,400 for Zen Technologies. Mazagon Dock, MOFSL said, highlighted a strong pipeline with major upcoming programmes such as the LPD, MCMV, follow-on P17 Bravo and the next-generation destroyer. It indicated that its order book was expected to cross Rs 1 lakh crore by FY27 as these opportunities materialised. For Garden Reach, ordering outlook remained very strong, with multiple large defence projects ahead. Three RFPs had already been issued, and seven major AoN-approved projects offered a significant pipeline. Management expected the order book to cross Rs 50,000 crore once the Next-Generation Corvette contract was signed. Astra Microwave, MOFSL said, expected strong near-term ordering, with over Rs 400 crore of orders planned for Q3FY26 and more than Rs 600 crore for Q4FY26. “Medium-term visibility remained solid, supported by a strong opportunity pipeline and improved technological capabilities. In the long term, India’s defence roadmap and increasing opportunities in radars, EW, space and communications provided a favourable growth environment,” it said. MOFSL said Solar Industries expected demand to strengthen in the second half as coal mining and infrastructure activity recovered from heavy monsoon disruptions. The company also anticipated strong momentum in defence, supported by a large order book and the start of Pinaka commercial supplies from Q3FY26, along with steady international demand across key markets.