In its latest quarterly preview, MOFSL has maintained a ‘Buy’ rating on several key players in India’s defence and capital goods sector, reflecting optimism about their financial performance and strategic positioning. The brokerage has highlighted Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Hindustan Aeronautics Ltd (HAL), and Astra Microwave as top picks, while assigning a ‘Neutral’ rating to Zen Technologies.
BEL, identified as MOFSL’s top defence pick, is expected to report a robust quarter. The brokerage anticipates BEL’s Q3 profit to reach Rs 1,487.30 crore, marking a 13 per cent year-over-year (YoY) increase. Sales are projected to grow by 17.8 per cent YoY to Rs 6,780 crore. This performance underscores BEL’s strong market position and its critical role in India’s defence infrastructure.
Similarly, BDL is poised for significant growth, with MOFSL forecasting a 40.4 per cent YoY rise in profit to Rs 206.60 crore. Sales are expected to increase by 37.6 per cent YoY to Rs 1,145.30 crore. BDL’s performance highlights its expanding capabilities in missile systems and strategic defence projects.
HAL is also anticipated to deliver strong results, with a projected 29.1 per cent YoY increase in profit to Rs 1,859.30 crore. Sales are expected to rise by 13.2 per cent YoY to Rs 7,874.50 crore. HAL’s growth trajectory is driven by its pivotal role in aircraft manufacturing and maintenance, as well as its ongoing projects with international partners.
In contrast, Astra Microwave is expected to face a challenging quarter, with a 35.7 per cent YoY drop in profit to Rs 30.50 crore, despite a modest 1.4 per cent YoY rise in sales to Rs 262 crore. This divergence suggests potential operational or market challenges that the company may need to address.
Zen Technologies, on the other hand, is projected to report a 26.8 per cent YoY rise in profit to Rs 49 crore, albeit on a 1.7 per cent drop in sales to Rs 139.10 crore. This indicates a possible focus on cost efficiency and operational improvements.
The broader defence sector is also witnessing significant developments. The Defence Acquisition Council (DAC) approved capital acquisition proposals worth Rs 79,000 crore during its winter session, bringing the FY26 year-to-date approvals to Rs 3.3 lakh crore. This figure is nearly double the defence capital outlay of Rs 1.8 lakh crore, highlighting the government’s commitment to modernising the armed forces.
Almost half of these approvals were announced in Q3FY26, with proposals worth Rs 1.6 lakh crore revealed in October and December 2025 combined. This provides order inflow visibility for the next 2-4 years, as the conversion of Acceptance of Necessity (AoN) into firm orders typically takes time.
MOFSL also noted that the DAC has extended the current emergency procurement window for the Armed Forces until mid-January 2026. This extension allows for 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. Additionally, 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.
These developments underscore the dynamic nature of India’s defence sector and the strategic importance of the companies involved. As the sector continues to evolve, the insights from MOFSL provide a valuable perspective on the financial and operational outlook for key players in this critical industry.