HAL, BEL, BDL, Astra Microwave, Zen Tech: Defence stocks to gain from Budget announcements
The capex for defence aircraft & aeroengines is budgeted at Rs 63,700 crore for FY27, which is seen positive for HAL and BEL
- Feb 2, 2026,
- Updated Feb 2, 2026 5:44 PM IST
Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL) and Astra Microwave Products Ltd are seen as key beneficiaries of the Budget 2026 announcements. Analysts said Union Budget FY2026-27 delivered a strong and structurally positive signal for India’s defence sector, given an impending need to safeguard against geopolitical uncertainties.
The sharp increase in overall defence allocation, Nomura India said, reinforced the government’s long-term commitment to national security and capability enhancement, firmly positioning defence as a secular growth theme rather than a cyclical one.
"We believe the meaningful rise in capital expenditure is particularly encouraging, as it directly translates into improved order inflows, execution visibility, and earnings potential for defence OEMs, system integrators, and component suppliers," Nomura said.
Following the Budget, Anand Rathi said it has turned cautious towards the all there shipyards i.e., GRSE, CSL and MDL. It is Neutral on BEL, given the diverse range of product offerings. "We don’t expect any major awarding for HAL manufacturing division. Solar Industries would continue to remain our top pick from the defence pack," it said.
PL Capital said capex on defence aircraft & aeroengines went up significantly. It noted that the capex has been revised to Rs 72,800 crore for FY26 from Rs 48,600 crore earlier. The capex for defence aircraft & aeroengines is budgeted at Rs 63,700 crore for FY27, which is seen positive for HAL and BEL.
Elara Securities said the total defence capital expenditure has surged 18 per cent to Rs 2.2 lakh crore likely due to a rise in imports of Rafale M, MQ9B drones and MH-60R helicopters, while allocation to construction increased 24 per cent YoY, to heavy vehicles 24 per cent YoY, Naval fleet 17 per cent YoY, and other equipment 62 per cent YoY.
"The government has also announced a range of incentives for shipbuilding, ship repair, and civil aviation, including a reduction in basic customs duty on imported aircraft parts for MRO, to promote domestic manufacturing clusters and boost export. It sees the Budget positive for HAL, BEL, MIDHANI, Data Patterns, Astra Microwave, MTAR Technologies, Zen Technologies, Bharat Forge, Axiscades Technologies, Paras Defence, Cochin Shipyard, GRSE, Mazagon Docks, Swan Defence and Heavy Industries.
The capex on other defence equipment, which includes missiles and other defence electronics, went up 30 per cent at Rs 82,200 crore in FY27 from Rs 63,100 crore in FY26. PL Capital sees BEL, BDL and Astra Microwave as key beneficiaries.
HDFC Institutional Equities said defence allocation at Rs 2.3 lakh crore is increase of 17 per cent for FY27BE against Rs 1.97 lakh crore during FY26RE. It said order pipeline will be aided as major allocation has been in navy fleets, aircrafts and aeroengines and other equipment. It sees Budget announcements positive for BDL, BEL, HAL, Mazagon Dock, Garden Reach and Cochin Shipyard, among others.
In the Budget, basic customs duty has been exempted on raw materials and components for aircraft parts across defence sector maintenance, repair, overhaul operations and civilian aircraft production. The Budget proposed indigenous manufacturing incentives with Viability Gap Funding scheme. This is expected to support operations and regional connectivity. It proposed establishment of inland waterway vessel servicing ecosystems at Varanasi and Patna.
"We believe that the FY27 budget marks a structural shift from mere asset procurement to ecosystem-led value-creation. By slashing duties on MRO inputs, we believe that India will materially lower its cost base. This is expected to accelerate localisation and cement the nation's status as a dominant regional aerospace hub," said Choice Institutional Equities.
It sees HAL gaining from seaplanes and aviation MRO, Azad Engg and Unimech gaining from aircraft spares and components and GRSE and Cochin shipyard gaining from ship MRO and Inland Waterways.
Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL) and Astra Microwave Products Ltd are seen as key beneficiaries of the Budget 2026 announcements. Analysts said Union Budget FY2026-27 delivered a strong and structurally positive signal for India’s defence sector, given an impending need to safeguard against geopolitical uncertainties.
The sharp increase in overall defence allocation, Nomura India said, reinforced the government’s long-term commitment to national security and capability enhancement, firmly positioning defence as a secular growth theme rather than a cyclical one.
"We believe the meaningful rise in capital expenditure is particularly encouraging, as it directly translates into improved order inflows, execution visibility, and earnings potential for defence OEMs, system integrators, and component suppliers," Nomura said.
Following the Budget, Anand Rathi said it has turned cautious towards the all there shipyards i.e., GRSE, CSL and MDL. It is Neutral on BEL, given the diverse range of product offerings. "We don’t expect any major awarding for HAL manufacturing division. Solar Industries would continue to remain our top pick from the defence pack," it said.
PL Capital said capex on defence aircraft & aeroengines went up significantly. It noted that the capex has been revised to Rs 72,800 crore for FY26 from Rs 48,600 crore earlier. The capex for defence aircraft & aeroengines is budgeted at Rs 63,700 crore for FY27, which is seen positive for HAL and BEL.
Elara Securities said the total defence capital expenditure has surged 18 per cent to Rs 2.2 lakh crore likely due to a rise in imports of Rafale M, MQ9B drones and MH-60R helicopters, while allocation to construction increased 24 per cent YoY, to heavy vehicles 24 per cent YoY, Naval fleet 17 per cent YoY, and other equipment 62 per cent YoY.
"The government has also announced a range of incentives for shipbuilding, ship repair, and civil aviation, including a reduction in basic customs duty on imported aircraft parts for MRO, to promote domestic manufacturing clusters and boost export. It sees the Budget positive for HAL, BEL, MIDHANI, Data Patterns, Astra Microwave, MTAR Technologies, Zen Technologies, Bharat Forge, Axiscades Technologies, Paras Defence, Cochin Shipyard, GRSE, Mazagon Docks, Swan Defence and Heavy Industries.
The capex on other defence equipment, which includes missiles and other defence electronics, went up 30 per cent at Rs 82,200 crore in FY27 from Rs 63,100 crore in FY26. PL Capital sees BEL, BDL and Astra Microwave as key beneficiaries.
HDFC Institutional Equities said defence allocation at Rs 2.3 lakh crore is increase of 17 per cent for FY27BE against Rs 1.97 lakh crore during FY26RE. It said order pipeline will be aided as major allocation has been in navy fleets, aircrafts and aeroengines and other equipment. It sees Budget announcements positive for BDL, BEL, HAL, Mazagon Dock, Garden Reach and Cochin Shipyard, among others.
In the Budget, basic customs duty has been exempted on raw materials and components for aircraft parts across defence sector maintenance, repair, overhaul operations and civilian aircraft production. The Budget proposed indigenous manufacturing incentives with Viability Gap Funding scheme. This is expected to support operations and regional connectivity. It proposed establishment of inland waterway vessel servicing ecosystems at Varanasi and Patna.
"We believe that the FY27 budget marks a structural shift from mere asset procurement to ecosystem-led value-creation. By slashing duties on MRO inputs, we believe that India will materially lower its cost base. This is expected to accelerate localisation and cement the nation's status as a dominant regional aerospace hub," said Choice Institutional Equities.
It sees HAL gaining from seaplanes and aviation MRO, Azad Engg and Unimech gaining from aircraft spares and components and GRSE and Cochin shipyard gaining from ship MRO and Inland Waterways.