BEL, BDL, HAL, Zen Tech: Q3 defence preview, MOFSL's top stock pick

MOFSL, in its Q3 preview note on capital goods & defence, maintained 'Buy' rating on Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Hindustan Aeronautics Ltd (HAL) and Astra Microwave; and 'Neutral' rating on Zen Technologies. It said BEL is its top defence pick.

The brokerage expects BEL's Q3 profit to come in at Rs 1,487.30 crore, up 13 per cent YoY. It sees sales growing 17.8 per cent YoY to Rs 6,780 crore. BDL is seen reporting 40.4 per cent YoY growth in profit at Rs 206.60 crore on 37.6 per cent YoY rise in sales at Rs 1,145.30 crore. HAL, MOFSL said, may report 29.1 per cent YoY rise in profit at Rs 1,859.30 crore on 13.2 per cent YoY rise in sales at Rs 7,874.50 crore.

Astra Microwave is seen reporting 35.7 per cent YoY drop in profit at Rs 30.50 crore on 1.4 per cent YoY rise in sales at Rs 262 crore. Zen Technologies, MOFSL said, may post 26.8 per cent YoY rise in profit at Rs 49 crore on 1.7 per cent drop in sales at Rs 139.10 crore.    

MOFSL noted that India’s Defense Acquisition Council (DAC) approved capital acquisition proposals worth Rs 79,000 crore in its winter session, taking FY26 year-to-date approvals to Rs 3.3 lakh crore, nearly double the defense capital outlay of Rs 1.8 lakh crore. 

Almost half of these approvals are announced in Q3FY26, with proposals worth Rs 1.6 lakh crore announced in October and December 2025 combined. This provides order inflow visibility for the next 2-4 years, as the conversion of AoNs into firm orders typically takes time. the brokerage said.

MOFSL said the DAC has also extended the current emergency procurement window for the Armed Forces until mid-January 2026, allowing them to continue fast-track purchases of critical weapons, platforms, and equipment to meet urgent operational needs. 

Other key developments include the completion of user trials for the Akash-NG system, clearing it for induction. MOFSL expects BDL and BEL to receive production and supply contracts in CY26, with ramp-up orders to follow. The 5th F-404 engine has been delivered to HAL by GE, and the Government of India has rolled out guidelines for two major shipbuilding schemes, with a combined outlay of INR 447 billion, MOFSL said.