Defence Index Surges as India-Pakistan Tensions Escalate
As border tensions between India and Pakistan intensified, the Nifty India Defence Index surged 2.5% on May 9, highlighting investor appetite for defence-related stocks amid a rising emphasis on indigenous military manufacturing. The gains come as part of a broader 40% rally in some defence counters over the past month, driven by both geopolitical risk and the Indian government’s Make-in-India policy push. Prominent names such as HAL, BEL, BDL, and Bharat Forge witnessed sharp upswings on the back of strong earnings, order inflows, and robust long-term growth potential.
Highlights:
Nifty India Defence Index up 2.5% on May 9 amid elevated tensions.
Some defence stocks have rallied over 40% in the last one month.
Renewed focus on self-reliance and strategic procurement underpins the rally.
Government capex and export potential seen as major long-term growth drivers.
Bharat Dynamics (BDL): Strong Export Outlook and Missile Pipeline
Bharat Dynamics (BDL) rose 5% to Rs 1,535.80, supported by its strong presence in missile and torpedo systems. With an order book of Rs 22,800 crore, BDL holds nearly 7x its FY25E revenue, giving it high earnings visibility. Key programs under execution include Akash SAM, Astra Mk-II, and MRSAM, with analysts forecasting revenue and EPS CAGR of 55% over FY25–27E, supported by India’s defence export thrust.
Highlights:
Market Cap: Rs 53,279 crore; Stock up 5%.
Order book: Rs 22,800 crore (7x FY25E revenue).
FY25–27E EPS and revenue CAGR projected at 55%.
Major programs: Akash, Astra Mk-II, MRSAM.
Data Patterns (DPIL): IP-Focused Defence Electronics Growth
Data Patterns gained 3.12% to Rs 2,710, driven by its high-margin electronics systems and integrated in-house R&D capabilities. With an order book of Rs 1,300 crore, the company is pivoting toward full-system integration and proprietary IP. Analysts forecast a 30% revenue CAGR and 25% EPS CAGR, positioning DPIL among the sector’s most profitable players, despite a relatively high forward P/E of 63.28x.
Highlights:
Market Cap: Rs 12,392 crore; Stock up 3.12%.
Focus: Proprietary defence electronics & systems integration.
Strong margins, high growth in IP-led projects.
FY25–27E Revenue CAGR: 30%; EPS CAGR: 25%.
Hindustan Aeronautics (HAL): Monopolistic Position in Aerospace
HAL, India’s leading aerospace DPSU, rose 2% to Rs 4,513, supported by a massive Rs 94,100 crore order book and a pipeline worth Rs 4.4 lakh crore. The company is central to indigenous fighter jet and helicopter programs like LCA Mk-IA, AMCA, and IMRH. Analysts project a 26% revenue CAGR through FY27. However, EBITDA margins are likely to taper from 32.1% to 26% due to a shift from services to product revenue.
Highlights:
Market Cap: Rs 2.95 lakh crore; Stock up 2%.
FY24 order book: Rs 94,100 crore; Pipeline: Rs 4.4 lakh crore.
Major programs: LCA Mk-IA, AMCA, IMRH.
FY25–27E Revenue CAGR: 26%; EBITDA margins expected to moderate.
Bharat Electronics (BEL): Expanding EW and Radar Systems Portfolio
BEL, a core player in radar and missile integration systems, ended the session 3.12% higher at Rs 2,710. Its Rs 71,600 crore order book and Rs 1.1 lakh crore pipeline are supported by robust execution. BEL has delivered a 27.4% operating margin in 9MFY25, well above its 23–25% guidance. Analysts forecast a 17–20% revenue CAGR and 20% EPS CAGR through FY27.
Highlights:
Market Cap: Rs 12,392 crore; Stock up 3.12%.
Order book: Rs 71,600 crore; Pipeline: Rs 1.1 lakh crore.
FY27E Revenue CAGR: 17–20%; EPS CAGR: ~20%.
Strong performance in electronic warfare, radars.
Solar Industries: Global Growth in Precision Strike Systems
Solar Industries, a defence-focused explosives and warheads manufacturer, rose 1.27% to Rs 13,284. Its defence revenue share is expected to rise to 29% by FY27, from just 8% in FY24. Backed by a defence order book of Rs 13,400 crore, Solar is expanding globally with key capabilities in rockets, warheads, and guided systems. Analysts estimate FY25–27E revenue CAGR of 32.4% and EPS CAGR of 45%.
Highlights:
Market Cap: Rs 1.18 lakh crore; Stock up 1.27%.
Defence order book: Rs 13,400 crore.
FY27E defence revenue contribution: 29% (from 8%).
FY25–27E Revenue CAGR: 32.4%; EPS CAGR: 45%.
Zen Technologies: Simulation Niche Drives Future Growth
Zen Technologies surged 4.99% to Rs 1,406.40, buoyed by government push for simulation-based defence training. With an order book of Rs 950 crore and a target of Rs 500–600 crore in new orders in H1FY26, Zen is increasingly gaining visibility. Risks include client concentration and order delays, but analysts remain optimistic given its strategic positioning in simulators.
Highlights:
Market Cap: Rs 12,698 crore; Stock up 4.99%.
Order book: Rs 950 crore; FY26 H1 target: Rs 500–600 crore in new orders.
Sector leader in simulation and training systems.
Attractive risk-reward amid rising simulation demand.
Bharat Forge: Defence-Focused Diversification Gains Momentum
Bharat Forge advanced 3.28% to Rs 1,149, despite reporting a 7.48% decline in revenue to Rs 3,852.60 crore for Q4FY25. However, net profit rose 19.5% YoY to Rs 282 crore, driven by improved margins. Defence now accounts for around 70% of business, supported by a robust Rs 9,420 crore order book and Rs 6,959 crore in fresh orders during FY25. Bharat Forge is also investing in artillery systems, UAVs, and global exports.
Highlights:
Market Cap: Rs 53,259 crore; Stock up 3.28%.
Q4FY25 net profit: Rs 282 crore (+19.5% YoY).
Order book: Rs 9,420 crore; FY25 order wins: Rs 6,959 crore.
70% of business now defence-oriented.
