HAL, BEL, BDL, MIDHANI, Azad, Solar Industries shares: Two top defence picks

ICICI Securities on Thursday maintained its structurally positive stance on the Indian defence sector, saying the government policies have remained firmly supportive, implying a sustained double-digit growth in defence capex going ahead. Hindustan Aeronautics Ltd (HAL) and Solar Industries India Ltd are two of its preferred defence stock picks.

 The domestic brokerage noted that the Ministry of Defence has an annual capital outlay target of Rs 3 lakh crore by 2029. With this support, along with the recent Defence Procurement Manual 2025, acquisition timelines are expected to be significantly compressed.

"Given that DAC approvals were at an all-time high in FY26 and continued in Q1FY27 (Rs 52,000 crore AoN approved), we expect the order awarding momentum to pick up in FY27/28, especially in aerospace, missiles, electronic warfare and drone defence/offence side as the fabric of warfare has changed in the past couple of years," ICICI Securities said.

The brokerage said Navy may receive the long-awaited Rs 70,000 crore submarine orders soon. The geopolitical backdrop also provides a structural tailwind, as the conflict in the Middle East has reinforced defence budget urgency across GCCs, ICICI Securities said.

"Indian OEMs with established export track records or MoUs are likely to benefit disproportionality, especially in the areas of missiles, drones, aerospace, defence electronics and radars. Preferred stocks: HAL and Solar each rated BUY," ICICI Securities said.

The brokerage has 'Add' rating on Bharat Dynamics Ltd (BDL), Bharat Electronics Ltd (BEL) and Azad Engineering Ltd.

Astra Microwave is a 'Buy', and so is Mishra Dhatu Nigam Ltd (MIDHANI). Dynamatic Technologies is a 'Sell', while Zen Technologies Ltd is a 'Hold'.

Among the key defence sector highlights of the last one month, DAC cleared procurement proposals worth Rs 52,000 while India's defence exports surged to $20.5 billion in FY26. India’s private defence sector now accounts for 23 per cent of total production.

In the case of HAL, GE has delivered the seventh F404 engine to the Tejas maker. HAL has also issued a new tender to outsource Tejas Mk1A substructures. HAL and Safran have an agreement for the manufacturing of alloy turbine ring forgings for LEAP engines.

In the case of BEL, it has received a cumulative orders worth Rs 1,400 crore. India and Indonesia have undertaken an agreement for various defence deals including BrahMos and Astra MK1.

Astra Microwave Ltd has received orders for Uttam radar components from HAL. Indian Navy, meanwhile, has commissioned INS Nipun and INS Malvan.