Defense Stocks to BUY: There is selling pressure on defense stocks these days, should you invest money?
highlights
- Despite the ongoing decline in defense stocks, experts believe that the fundamentals of the sector remain strong.
- After the Defense Acquisition Council approved purchases worth ₹79,000 crore, select stocks are expected to rise in the long term.
- Do you have an opportunity to earn further money in these stocks? Which are the stocks where investors should keep an eye on?
What should be the outlook on defense stocks?
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Jyoti Gupta of Nirmal Bang Institutional Equities Research is positive on defense stocks. He cited good earnings potential, stable margins and strong order pipeline in the second quarter H2 as the reason behind this. Nirmal Bang’s Defense Analyst Jyoti Gupta expects a positive long-term outlook for select defense stocks after the Defense Acquisition Council (DAC) recently approved proposals worth ₹79,000 crore for the Army, Navy and Air Force.
In an exclusive conversation with ET NOW, Jyoti Gupta said that defense stocks are expected to increase earnings in the second quarter of the current financial year. He said that the earnings outlook for defense stocks remains positive in the near future. He said that the margins of the defense sector have increased and are expected to remain stable. Focusing on the defense budget next year 2026, he said that the allocation of defense sector is expected to increase in the budget.
Making his view on the defense sector, the expert said that some supply-chain risks remain, including dependence on China for rare earths, but the overall look is positive. He said that limited momentum is being seen in private defense companies, but the entire sector is supported by strong order book.
Defense Stocks: Which stocks to keep an eye on?
Gupta’s top picks in the defense sector include Hindustan Aeronautics Limited (HAL), Bharat Earth Movers Limited (BEML), Bharat Electronics Limited (BEL), Solar Industries and Data Patterns. Jyoti Gupta is particularly bullish on HAL. He believes that the government defense company can deliver 7 aircraft this year.
Market experts said that all these stocks are expected to perform well in the next 6 quarters. Jyoti Gupta has given a target of Rs 470 on Bharat Electronics shares, Rs 977 on Paras Defence, Rs 1234 on Astra Micro and Rs 1,774 on Bharat Dynamics. A target of Rs 2610 has been given on BEML, Rs 3515 on Mazgaon Dock, Rs 3653 on Data Pattern and Rs 6151 on HAL.
Gupta said that HAL has become my top pick because we may see a surprise factor, with around 7-8 aircraft likely to be delivered by FY26-27. BEML’s second quarter may be a bit weak due to assembly issues, but I expect recovery by fourth quarter.
He further said that BEL, Astra Microwave and Data Patterns should continue to perform well, with Data Patterns having the highest upside surprise potential among electronic warfare firms.
In the missile segment, Gupta said Bharat Dynamics Limited (BDL) could continue to deliver strong results. He said BDL has already surprised on the upside with better data.
The Defense Acquisition Council (DAC), headed by Defense Minister Rajnath Singh, has approved procurement proposals worth ₹79,000 crore to enhance the capabilities of India’s armed forces. These approvals include acquisitions for the Indian Army, Navy and Air Force, covering a range of systems such as missiles, lightweight torpedoes, high-mobility vehicles and landing platform docks.
Jyoti Gupta, defense analyst at Nirmal Bang, expects the Defense Acquisition Council’s approval of ₹79,000 crore to significantly benefit Larsen & Toubro (L&T) and Cochin Shipyard, especially for landing platform dock projects.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.
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