Ahead of Q3 results, Nirmal Bang Institutional Equities said it remains structurally optimistic about the defence sector, citing the continued indigenisation effort, strong order pipeline, and robust growth potential. BEML remains its top pick in the defence category, followed by Hindustan Aeronautics Ltd (HAL) and Data Patterns (India) Ltd. The brokerage also raised rating for Paras Defence and Space Technologies Ltd to 'BUY' from 'HOLD', citing attractive entry point.
Astra Microwave Products Ltd The company management has guided for 20-22 per cent revenue growth for FY25, supported by a robust order inflow of Rs 1,200-1,300 in FY25. In 2QFY25, the company secured orders worth Rs 230 crore, and Nirmal Bang estimates an order inflow of Rs 280 crore in 3QFY25, a 61 per cent YoY increase. Additionally, the management expects PBT margins of 17-18 per cent for FY25. Regarding Ebitda, Nirmal Bang anticipates a 220bps improvement in 3QFY25 YoY, with margins reaching 30.8 per cent, driven by a favorable product mix. It maintained a 'HOLD' rating at a target multiple of 43 times Decewmber 2026 EPS.
Bharat Dynamics Ltd The company management forecast a stronger H2FY25 than the H1FY25. Revenue is expected to grow 25-30 per cent yearly over the coming five years, with a target of more than Rs 3,000 crore in FY25. The present order book is at Rs 18,800 crore, and the business is expected to maintain an average order book size of Rs 20,000 crore for the next 4-5 years, driven by 25-30 per cent annual growth in order inflows. BDL is collaborating with startups and companies to cultivate Indigenous capabilities via Technology Transfer (ToT) to reduce reliance on overseas OEMs. It is aggressively expanding its focus in the export segment, particularly for the Akash Weapon System, as it pursues international orders. Additionally, BDL collaborates with DRDO labs, academic institutions, and niche technology partners to develop new products in emerging technologies, further solidifying its strategic role in India’s defence ecosystem.
It has reduced supply chain concerns while geopolitical disputes such as RussiaUkraine and Israel-Palestine remain unresolved. Component deliveries from Israel have resumed, guaranteeing smoother execution. Nirmal Bang believes the company will execute projects within the stipulated timelines and therefore increased the multiple by 8.5 per cent. It maintained a 'HOLD' rating on BEL with a target multiple of 28 times March 2026 EPS.
Bharat Electronics Ltd In Q3FY25, the company secured orders totaling Rs 970 crore for platform screen doors intended for metro rail, radars, communication equipment, jammers, seekers, enhanced submarine sonar systems, upgraded satellite communication terminals, test stations, spare parts, and associated services. It obtained orders totaling Rs 630 crore from the Ministry of Defence (MoD) for the upkeep of the Akash Missile System, telescopic sights, communication equipment, and electronic voting machines. Nirmal Bang retained its 'HOLD' rating with a target multiple of 35 times March 2026 EPS.
Bharat Earth Movers Ltd (BEML) In the Q2FY25, BEML announced an order inflow of Rs 440 crore, indicating a decline of approximately 89 per cent YoY. During the 3QFY25, a significant number of orders were received, including for a 50-ton trailer; the design, manufacture, supply, testing, and maintenance of standard gauge metro rolling stock accompanied by a 15-year comprehensive maintenance contract; 48 BH60M rear dump trucks along with spare parts and consumables; and the design and manufacturing of components for high-speed rail. The closing order book reached Rs 15,700 crore, reflecting a 28 per cent YoY growth.
The management is confident about achieving a significant order inflow of Rs 25,000-30,000 crore in FY25, mainly fuelled by the rail and metro sectors. The company anticipates delivering 10 Vande Bharat trains by FY25. Nirmal Bang maintained its 'BUY' rating with a target price of Rs 5,600.
"A robust order book, improved margins, and precise execution visibility in the Defence & Aerospace and Rail & Metro sectors support the valuation premium," it said.
Data Patterns (India) Ltd In the 2QFY25, the company announced an order book totaling Rs 970 crore. The management has outlined expectations for revenue growth of 20-25 per cent in FY25, supported by robust intellectual property and minimal import content, both anticipated to maintain high Ebitda margins of 35-40 per cent. Nirmal Bang retained its 'BUY' rating with a 62 times December 2026 EPS target multiple
Hindustan Aeronautics Ltd HAL's management has guided for FY25-FY28 revenue growth of 15-18 per cent, with Repair and Overhaul (ROH) services expected to contribute 9-10 per cent. The company is dedicated to optimising costs in order to enhance profitability margins. HAL is enhancing its civilian helicopter, ALH Dhruv, with a modern glass cockpit and is working towards civil certification for the Shakti engine, broadening its application beyond the defence sector. Furthermore, HAL will provide the first LCA Tejas Mk-1A fighter aircraft to the IAF by March 2025. Nirmal Bang retained its 'BUY' rating on the stock with a target multiple of 24 times March 2026 EPS.
Mazagon Dock Shipbuilders Ltd Mazagon Dock plans to provide one destroyer, one frigate, and a submarine in FY25. The company's order book was recorded at Rs 39,800 crore as of QFY25. Potential significant projects include the P75-I submarines, four P17A stealth frigates, four next-generation destroyers, and the P17 Bravo project, featuring two vessels each for Mazagon Dock and GRSE. Furthermore, Mazagon Dock has secured a contract worth Rs 1,990 crore from the Ministry of Defence to construct an Air Independent Propulsion Plug to improve conventional submarines' endurance. Nirmal Bang retained 'HOLD' on the stock with a 25 times December 2026 EPS target multiple.
Paras Defence and Space Technologies Ltd The company's order book stood at Rs 600 crore at last count, with the management anticipating it would sustain double the full-year revenue for FY25 and forecast growth to Rs 1.170 crore by FY28, propelled by 40 per cent from optical and optronics systems, 43 per cent from defence engineering, and 17 per cent from anti-drone systems. PARAS has obtained an Arms Act license to manufacture modernized MK-46 and MK-48 Light Machine Guns, with an annual production capacity of 6,000 units for each model. Nirmal Bang has upgraded Paras Defence to 'BUY' from 'HOLD', as the stock has corrected by 33 per cent from its 52-week high, presenting an appealing entry point. Nirmal Bang said it maintained its earnings estimates and valuation multiple for Paras, consistently valuing it at 72 times December 2026 EPS.