HAL, BEL, BDL, Data Patterns, Azad, MIDHANI shares: Top 3 defence stock picks ahead of Q2 results
For the September quarter, ICICI Securities expects to remain muted for PSUs with revenue growth likely ranging from flat to lower-double digit, which is in line with historical trends.
- Oct 7, 2026,
- Updated Oct 7, 2026 1:44 PM IST
ICICI Securities in a note on defence sector said Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Azad Engineering are its top sectoral picks going into the September quarter results season, as it expects procurement in the aerospace segment that includes missiles, interceptors, drones,radars and munitions to benefit the most owing to the changing nature of warfare.
The brokerage retained its structurally positive stance on the Indian defence sector.
"Government policy remains firmly supportive, evidenced by the MoD’s capital outlay target of Rs 3 lakh crore by 2029 and expanding footprint in the export region. We expect sustained double-digit CAGR in defence capex. Furthermore, with defence procurement approvals worth Rs 8 lakh crore in the past 18 months, order inflow momentum could pick up in H2FY27," ICICI Securities said.
The domestic brokerage expects Rs 2–3 lakh crore worth of orders to crystalise into RFPs and contracts over the next 12-18 months.
ICICI Securities said: "The geopolitical backdrop continues to provide a structural tailwind, as the Middle East conflict has reinforced defence budget urgency across the GCC. Indian OEMs with established export track records or MoUs are likely to benefit disproportionately, especially in the areas of missiles, drones, aerospace, defence electronics and radars. HAL, BEL and Azad are our preferred picks."
For the September quarter, ICICI Securities expects to remain muted for PSUs with revenue growth likely ranging from flat to lower-double digit, which is in line with historical trends.
In a few specific cases, private players could showcase strong execution in Q2, with revenue growth of 10–50 per cent revenue YoY growth, a departure from the historical trends, ICICI Securities said.
ICICI Securities expect mean revenue growth of around 13 per cent YoY, excluding outliers in defence coverage, with Zen Technologies (55 per cent YoY), Solar Industries India (52 per cent YoY) and Azad Engineering (30 per cent YoY) standing out as strong performers.
Zen Technologies’ growth is expected to be driven by strong execution in the quarter (90 per cent QoQ), while Solar Industries India is likely to benefit from higher realisations in its international and defence businesses, ICICI Securities said.
Azad Engineering’s margins are likely to remain elevated (Ebitda likely to rise 34 per cent YoY), partly aided by rupee depreciation. Data Patterns (India) Ltd could post Ebitda growth of around 31 per cent YoY, led by the start of A220 door deliveries in aerospace and strong demand in hydraulics.
Among PSUs, Bharat Electronics Ltd (15 per cent revenue YoY) and Mishra Dhatu Nigam (15 per cent revenue YoY) are likely to see steady execution, with Bharat Electronics’ margins at the upper end of its guided range. HAL could post a muted quarter (6 per cent revenue YoY) on a higher base and further delays in Tejas Mk-1A deliveries, it said.
ICICI Securities said BDL's revenue, Ebitda and PAT could decline 2 per cent, 15 per cent and 17 per cent YoY, respectively, on a high base, despite a pick-up in Akash execution.
Astra Microwave Products is likely to post moderate growth (+10 per cent revenue YoY), with execution back-ended in H2FY27, ICICI Securities said.
Ahead, order accretion across P75(I) submarines, missile platforms (QRSAM, MRSAM and VL-SRSAM), radars and anti-drone systems, along with the commencement of Tejas Mk-1A deliveries, remain the key catalysts for the sector, the bokerage said.
ICICI Securities in a note on defence sector said Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Azad Engineering are its top sectoral picks going into the September quarter results season, as it expects procurement in the aerospace segment that includes missiles, interceptors, drones,radars and munitions to benefit the most owing to the changing nature of warfare.
The brokerage retained its structurally positive stance on the Indian defence sector.
"Government policy remains firmly supportive, evidenced by the MoD’s capital outlay target of Rs 3 lakh crore by 2029 and expanding footprint in the export region. We expect sustained double-digit CAGR in defence capex. Furthermore, with defence procurement approvals worth Rs 8 lakh crore in the past 18 months, order inflow momentum could pick up in H2FY27," ICICI Securities said.
The domestic brokerage expects Rs 2–3 lakh crore worth of orders to crystalise into RFPs and contracts over the next 12-18 months.
ICICI Securities said: "The geopolitical backdrop continues to provide a structural tailwind, as the Middle East conflict has reinforced defence budget urgency across the GCC. Indian OEMs with established export track records or MoUs are likely to benefit disproportionately, especially in the areas of missiles, drones, aerospace, defence electronics and radars. HAL, BEL and Azad are our preferred picks."
For the September quarter, ICICI Securities expects to remain muted for PSUs with revenue growth likely ranging from flat to lower-double digit, which is in line with historical trends.
In a few specific cases, private players could showcase strong execution in Q2, with revenue growth of 10–50 per cent revenue YoY growth, a departure from the historical trends, ICICI Securities said.
ICICI Securities expect mean revenue growth of around 13 per cent YoY, excluding outliers in defence coverage, with Zen Technologies (55 per cent YoY), Solar Industries India (52 per cent YoY) and Azad Engineering (30 per cent YoY) standing out as strong performers.
Zen Technologies’ growth is expected to be driven by strong execution in the quarter (90 per cent QoQ), while Solar Industries India is likely to benefit from higher realisations in its international and defence businesses, ICICI Securities said.
Azad Engineering’s margins are likely to remain elevated (Ebitda likely to rise 34 per cent YoY), partly aided by rupee depreciation. Data Patterns (India) Ltd could post Ebitda growth of around 31 per cent YoY, led by the start of A220 door deliveries in aerospace and strong demand in hydraulics.
Among PSUs, Bharat Electronics Ltd (15 per cent revenue YoY) and Mishra Dhatu Nigam (15 per cent revenue YoY) are likely to see steady execution, with Bharat Electronics’ margins at the upper end of its guided range. HAL could post a muted quarter (6 per cent revenue YoY) on a higher base and further delays in Tejas Mk-1A deliveries, it said.
ICICI Securities said BDL's revenue, Ebitda and PAT could decline 2 per cent, 15 per cent and 17 per cent YoY, respectively, on a high base, despite a pick-up in Akash execution.
Astra Microwave Products is likely to post moderate growth (+10 per cent revenue YoY), with execution back-ended in H2FY27, ICICI Securities said.
Ahead, order accretion across P75(I) submarines, missile platforms (QRSAM, MRSAM and VL-SRSAM), radars and anti-drone systems, along with the commencement of Tejas Mk-1A deliveries, remain the key catalysts for the sector, the bokerage said.