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HAL, BEL and Data Patterns: Why Jefferies is positive on these 3 defence stocks

HAL, BEL and Data Patterns: Why Jefferies is positive on these 3 defence stocks

Jefferies has expressed optimism about defence stocks HAL, BEL, and Data Patterns, noting their potential amidst rising defence expenditures.

Amit Mudgill
Amit Mudgill
  • Updated Jun 24, 2025 3:27 PM IST
HAL, BEL and Data Patterns: Why Jefferies is positive on these 3 defence stocksHAL and Data Patterns are top picks due to strong export opportunities. The brokerage highlights a significant rise in India's defence spend and export targets.
SUMMARY
  • India’s defence spending rose 25% year-on-year by March 2025
  • Defence exports grew from ₹1,070 crore in FY17 to ₹23,600 crore in FY25
  • Data Patterns in talks with global OEM for defence electronics export

India’s defence sector is seeing a significant upturn, with Jefferies spotlighting Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Data Patterns as top investment picks amid a broader sector expansion. Jefferies' endorsement comes as India's defence spend rose by 25% year-on-year as of March 2025, achieving a 3% growth for FY25. The fiscal year 2026 commenced robustly with a 122% year-on-year increase in April, highlighting a solid start against a budgeted 13% growth. This growth trajectory is a testament to the government's commitment to bolstering the defence sector.

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Following 'Operation Sindoor' in May 2025, the Indian government intensified its focus on promoting India-made defence equipment globally, aiming to enhance export opportunities. As a result, HAL and Data Patterns have emerged as Jefferies' top picks, with BEL also receiving favourable attention. The government’s strategic initiative aims to significantly boost defence exports, which currently stand at 10% of the ₹30,000 crore target for FY26. These efforts are part of a broader strategy to elevate India's standing in the global defence market.

A notable development is Data Patterns' ongoing discussions with a global original equipment manufacturer (OEM) for exporting multimodal hardware defence electronics. This positions the company well for further growth. Jefferies has rated Data Patterns as a buy, emphasising its promising discussions and potential orders, which could bolster its market positioning. The company's proactive engagement with international partners underscores its commitment to innovation and expansion.

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According to Defence Secretary R.K. Singh, defence exports have surged from ₹1,070 crore in FY17 to ₹23,600 crore in FY25, with private sector players largely driving this growth. This trend aligns with the government's export-driven strategy, focusing on indigenous defence technologies such as Brahmos Missiles and Akashtek. The collaboration between public and private sectors is pivotal in achieving these ambitious targets.

Global defence spending trends are also influencing India's sector growth. NATO's proposal for member countries to allocate 3.5% of GDP to core defence capabilities signals a broader increase in defence budgets. This global dynamic, coupled with regional tensions, is likely to further stimulate demand for advanced defence systems and equipment. The international landscape presents both challenges and opportunities for India's defence sector.

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Jefferies’ report also underscores HAL and BEL’s strong order book and pipeline, which support their medium-term growth visibility. The brokerage has affirmed a buy rating for HAL and a hold for BEL, acknowledging their strategic importance and robust market presence. These companies are well-positioned to leverage the growing demand for defence technology.

The private sector is playing an increasing role in the defence industry, with companies like MTAR, Sushen, and Paras seen as promising contributors to the sector's expansion. Jefferies remains constructive on these players, anticipating their continued contribution to the sector's growth trajectory. The collaboration between established PSUs and emerging private firms is crucial for sustained growth.

Overall, Jefferies’ positive outlook on the Indian defence sector is built on the foundation of increasing exports and strategic government initiatives. With India targeting a rise in defence exports to ₹50,000 crore by FY30, the focus remains on leveraging indigenous technologies and expanding global partnerships. The future of India's defence industry looks promising, with significant potential for growth and innovation.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jun 24, 2025 3:27 PM IST
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