Bharat Electronics Limited (BEL), Hindustan Aeronautics Limited (HAL), and Bharat Dynamics Limited (BDL) are among the major domestically focused defence stocks likely to benefit from the Defence Acquisition Council’s (DAC) recent approval of projects, said domestic brokerage Motilal Oswal.
In its latest note, the brokerage highlighted that the recent capital acquisition proposals approved by the DAC are expected to benefit both leading defence PSUs and select private players. It added that the sector is poised to gain from a larger total addressable market (TAM) and the finalization of orders over the next few years.
Last week, the DAC for the Indian Army, Navy, and Air Force. This follows an earlier approval of ₹670 billion in August 2025, reflecting the government’s continued focus on strengthening the defence sector.
So far in FY26, the DAC has accorded Acceptance of Necessity (AoN) for proposals worth about ₹2.5 lakh crore under various categories of capital procurement, surpassing FY25’s approvals of ₹2.2 lakh crore. The share of domestic procurement has also risen sharply to 92% in FY25 from 54% in FY19.
Amid expanding defence project approvals, Motilal Oswal believes defence companies are well-positioned to benefit from improved order inflows, strong order books, stable margins, and rising export opportunities.
BEL, HAL, and BDL stocks can rise up to 23%
The brokerage has retained its bullish outlook on Bharat Electronics Limited (BEL), Hindustan Aeronautics Limited (HAL), and Bharat Dynamics Limited (BDL).
It noted that BEL is well-positioned to capture orders for electronic warfare systems, radars, and naval sensor suites. HAL, meanwhile, could benefit from collaborative development opportunities in long-range autonomous systems and aerial platforms. BDL is expected to gain from missile and torpedo programs such as NAMIS and the Advanced Lightweight Torpedo.
- Bharat Electronics Limited (BEL) | Buy | Target Price: ₹490 | Upside: 18%
- Hindustan Aeronautics Limited (HAL) | Buy | Target Price: ₹5,800 | Upside: 21.6%
- Bharat Dynamics Limited (BDL) | Buy | Target Price: ₹1,900 | Upside: 23%
Key monitorables
Going forward, the brokerage said it would watch out for emergency procurement announcements that could fast-track critical platform and weapon acquisitions, a step-up in the overall defence budgetary allocations in the upcoming years, particularly towards capital outlay and indigenization-linked schemes, and incremental export opportunities for Indian defence manufacturers as the government intensifies its push to achieve the ₹500 billion defence export target by FY29.
Additionally, progress on project-level clearances, collaborative development programs with foreign OEMs, and faster execution under the iDEX and Make II frameworks will be key indicators of sector momentum.
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