Defence Stocks Gain Rally Back Into Focus: Why Brokerages Are Bullish on HAL, BEL and Zen Tech
Are Defence Stocks Preparing for Their Next Big Move?
India’s defence sector has already delivered massive wealth creation over the past few years. But despite the sharp rally, brokerages believe the growth story is far from over.
Fresh buy recommendations on leading defence stocks such as HAL, BEL and Zen Technologies have once again drawn investor attention to the sector.
The latest report from Choice Institutional Equities suggests that rising defence spending, stronger localisation and growing export opportunities could continue supporting defence stocks in the coming years.
Defence Stocks Gain Fresh Buy Calls Amid Strong Growth Visibility
Choice Institutional Equities has maintained a positive outlook on defence sector stocks, citing robust order inflows, healthy execution pipelines and improving domestic manufacturing capabilities.
According to the brokerage, India’s defence ecosystem continues to benefit from military modernisation programmes, higher indigenisation levels and sustained government spending.
Companies operating across aerospace, radar systems, electronic warfare, anti-drone technology and missile programmes are witnessing strong demand visibility.
This outlook has prompted the brokerage to reiterate buy ratings on several leading defence stocks.
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Brokerage Top Picks Summary
| Stock | CMP (₹) | Target (₹) | Upside/Downside |
|---|---|---|---|
| HAL | 4,304 | 5,050 | +17.3% |
| BEL | 411 | 500 | +21.7% |
| Zen Technologies | 1,665 | 1,850 | +11.1% |
| Data Patterns | 4,043 | 4,060 | +0.4% |
| Apollo Micro Systems | 409 | 365 | -10.8% |
| Cyient DLM | 3,484 | 3,300 | -5.3% |
| Azad Engineering | 2,017 | 1,900 | -5.8% |
| Astra Microwave | 1,402 | 1,300 | -7.3% |
The biggest upside in the list belongs to BEL (21.7%), followed by HAL (17.3%) and Zen Technologies (11.1%), making them the brokerage’s preferred defence bets.
Likely Winners
- Hindustan Aeronautics Limited (HAL) → Positive bias, possible 2–5% upside
- Bharat Electronics Limited (BEL) → Strong institutional favourite, possible 2–4% upside
- Zen Technologies → Higher-risk, higher-reward stock, could move 3–7%
- Data Patterns (India) → May see speculative buying
- Apollo Micro Systems → Positive momentum possible
Stocks That May Underperform
- Azad Engineering
- Astra Microwave Products
HAL Remains a Top Defence Stock Pick
The brokerage maintained a buy rating on Hindustan Aeronautics Limited with a target price of ₹5,050 against the current market price of ₹4,304.
Choice Institutional Equities highlighted HAL’s record order book of ₹2.54 lakh crore, one of the largest among defence sector stocks.
The brokerage expects additional orders worth nearly ₹90,000 crore over the next two years.
HAL is also projected to deliver FY27 revenue growth of 12.3% year-on-year while maintaining EBITDA margins of 30-31%.
For investors seeking long-term exposure to defence stocks, HAL continues to remain a key beneficiary of India’s defence manufacturing push.
BEL Could Benefit From Major Defence Programmes
Another preferred defence stock is Bharat Electronics Limited.
Choice Institutional Equities retained its buy rating on BEL with a target price of ₹500 compared with the current market price of ₹411.
The brokerage expects Bharat Electronics to secure more than ₹55,000 crore worth of order inflows during FY27.
BEL is expected to benefit from key defence programmes including QRSAM, Project 75I submarines and directed energy weapon systems.
The brokerage forecasts FY27 revenue growth of 17.1% year-on-year while EBITDA margins are expected to remain above 30%.
Zen Technologies Emerges as an Anti-Drone Opportunity
Choice Institutional Equities also reiterated a buy rating on Zen Technologies.
The brokerage assigned a target price of ₹1,850 against the current market price of ₹1,665.
Zen Technologies is increasingly being viewed as a key player in anti-drone systems, military simulators and autonomous defence technologies.
The company currently has an order book worth ₹1,336 crore and has guided for cumulative revenue of ₹4,000 crore during FY27 and FY28.
As anti-drone systems become a critical part of modern warfare, investors are closely watching Zen Technologies among emerging defence stocks.
Which Defence Stocks Earned Add Ratings?
Among other defence sector stocks, Choice Institutional Equities maintained an add rating on Data Patterns (India) Limited.
The brokerage set a target price of ₹4,060 against the CMP of ₹4,043.
Data Patterns is seeing strong traction from programmes such as BrahMos seekers, AMCA and electronic warfare systems.
The company also reported a remarkable 216% year-on-year jump in FY26 order inflows.
Similarly, Apollo Micro Systems received an add rating with a target price of ₹365.
The brokerage expects Apollo Micro Systems to deliver revenue growth of nearly 59.5% year-on-year in FY27.
Meanwhile, Cyient DLM retained an add rating despite a target price below the current market price.
Why Some Defence Stocks Received Reduce Ratings
Not all defence stocks received positive recommendations.
Choice Institutional Equities assigned reduce ratings to Azad Engineering and Astra Microwave Products.
The brokerage cited valuation concerns following strong stock price rallies.
While both companies continue to benefit from favourable defence sector trends, analysts believe much of the near-term growth is already reflected in current valuations.
Here’s What Happened Today and Why Traders Reacted
Defence stocks remained in focus after Choice Institutional Equities reaffirmed its positive sector outlook.
The brokerage’s buy calls on HAL, BEL and Zen Technologies reinforced confidence in the defence sector’s long-term growth prospects.
Investors reacted positively to strong order books, rising defence budgets, increasing localisation and improving export opportunities.
The report also highlighted visibility of future earnings growth, which remains a key driver for defence stocks.
What Impact Could This Have on Investors?
For investors, the report reinforces the long-term investment case for defence stocks.
Companies with large order books, strong execution capabilities and exposure to strategic defence programmes may continue benefiting from India’s defence modernisation efforts.
HAL, BEL and Zen Technologies remain among the brokerage’s preferred defence stocks due to their earnings visibility and strong growth outlook.
However, investors should also remain mindful of valuations, especially after the sharp rally witnessed across defence sector stocks over the past two years.
The broader message from the brokerage is clear: while stock selection is becoming increasingly important, the structural growth story for India’s defence sector remains firmly intact.
