BEL, BDL, Astra Microwave to benefit from Rs 54K cr orders; target prices

Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL) and Astra Microwave Ltd are among defence stocks that are likely to benefit after the Defence Acquisition Council (DAC) sanctioned eight proposals amounting to more than Rs 54,000 crore, including upgrades to T-90 tank engines and procurement of Varunastra Torpedoes.

The proposals included enhancement of the T-90 tank engine's power from 1,000 horsepower to 1,350 horsepower. This upgrade is expected to enhance the operational capabilities of the T-90 tanks, a key asset in the Indian Army's arsenal. Additionally, the DAC has greenlit the procurement of Varunastra Torpedoes, an indigenously-developed ship-launched anti-submarine torpedo developed by Naval Science & Technological Laboratory and will be produced by BDL.

Another key development is the approval for procuring Airborne Early Warning and Control (AEW&C) Aircraft Systems. This acquisition is set to benefit several companies, including Bharat Electronics Limited (BEL) and Astra Microwave, along with other firms specialising in radar systems.

"With AoNs and orders gathering momentum and facilitation by a more efficient capital acquisition process, we believe FY26 is likely to be an interesting year for defence sector. Our top picks in the sector are: Solar Industries (Buy; TP: Rs 13,720), PTC Industries (Buy; TP: Rs 20,070) and Azad Engineering (BUY; TP: Rs 2,350)," ICICI Securities said.

That said, the brokerage said the fresh AoN is likely to be beneficial for BDL (target price: Rs 1,400), BEL (target price: Rs 350) and Astra Microwave (target price: Rs 935) – all BUYs.

The DAC has also endorsed reforms in the capital acquisition process, aiming to streamline and optimise defence procurement procedures. These reforms are expected to expedite project approvals and enhance transparency and efficiency in procurement processes.

Market analysts foresee a positive impact on the defence sector, with the anticipated rise in orders and AoNs. The potential implementation of capital acquisition process reforms could lead to a significantly improved financial year 2026 for the defence industry, they said.

Market analysts noted that the total share of domestic procurement has jumped to 75 per cent from 54 per cent in and is expected to improve further. Antique Stock Broking in a note said there is tremendous opportunity for Indian defence manufacturers like PTC Industries Ltd, Mazagon, Hindustan Aeronautics, BEL, BDL, and other defence players.

It maintained 'Buy' ratings on PTC Industries with a target of Rs 19,639 for PTC Industries Ltd, Rs 4,887 for HAL, Rs 2,757 on Mazagon Dock Shipbuilders, Rs 376 on BEL and Rs 1,351 on BDL.

Market analysts said the DAC's recent decisions underline the Indian government's commitment to strengthening its defence infrastructure and capabilities.

The focus on enhancing technological capabilities and modernising defence assets aligns with the broader goal of achieving self-reliance in defence production, they said.

As the industry anticipates the implementation of the newly approved reforms, there is an expectation of increased momentum in defence procurement and sustainable growth prospects for the sector in the coming years.