The Defence Acquisition Council has cleared proposals worth Rs 670 billion for the Army, Navy, and Air Force, covering a range of items, from Compact Autonomous Surface Craft to thermal imager-based driverless night sights. The move signals a stronger push for domestic manufacturing, which could lift order activity for key defence companies whose stocks have recently corrected from highs.

Astra Microwave

Astra Microwave designs and manufactures defence, aerospace, and space electronics, including radars, tactical systems, and missile sub-systems. 

It stands to gain from Mountain Radar orders, QRSAM and Akash missile projects, as well as the growing demand for anti-drone solutions. 

In FY25, revenue rose 15.7% to Rs 10.5 billion, with margins improving to 25.6% and PAT jumping 27% to Rs 1.5 billion. Its Rs 23 billion order book offers 2.2 times revenue visibility, and the company targets Rs 14 billion in new orders this year. 

The stock trades at a PE of 60x, above its 10-year median of 33x.

Bharat Electronics (BEL)

BEL, a defence PSU with 51.1% government ownership, supplies radars, communication, and electronic warfare systems to the armed forces.

It is well-placed for orders in thermal imager-based night sights, upgrades to the BARAK-1 missile system, mountain radars, and the integration of Saksham and Spyder systems. 

Q1FY26 revenue rose 4.6% YoY to Rs 44.4 billion, while PAT jumped 22.5% to Rs 9.7 billion, aided by higher margins of 28.1%. The Rs 749 billion order book is three times trailing revenue, and FY26 guidance includes over 15% revenue growth, Rs 270 billion in new orders, and a potential Rs 300 billion+ QRSAM deal. 

The stock trades at a P/E ratio of 52x, compared to a 10-year median of 24x.

Hindustan Aeronautics (HAL)

HAL, India’s largest defence PSU, has built over 4,200 aircraft and 5,200 engines and provides repair and overhaul services. 

It will benefit from MALE drone orders under the DRDO programme. FY25 revenue grew 2% to Rs 301 billion, while PAT rose 9.7% to Rs 83.6 billion despite supply chain issues. 

The Rs 1.9 trillion order book — nearly 6x annual revenue — includes contracts for engines, helicopters, and Sukhoi aircraft. HAL also sees an order pipeline of Rs 1 trillion in manufacturing and Rs 200 billion in overhaul work over the next two years, with Rs 150 billion earmarked for capacity expansion. 

It trades at a PE of 36x versus a 10-year median of 14x.

At 11:13 AM, Astra Microwave was down 1.52% at Rs 956.05, while BEL slipped 0.62% to Rs 385.35, and HAL fell 1.62% to Rs 4,476.90 on NSE.