Defence stocks to buy: HAL, Bharat Dynamics, MIDHANI are DAM Capital's top picks with up to 39% upside - check targets
India's defence and aerospace sector could be entering a new phase of growth, with rising domestic procurement, localisation, defence electronics, drones and global aerospace partnerships creating opportunities across the manufacturing value chain.
Brokerage DAM Capital, following discussions with industry leaders and management teams, has identified Hindustan Aeronautics (HAL), Mishra Dhatu Nigam (MIDHANI) and Bharat Dynamics (BDL) as its preferred picks among defence public sector undertakings (DPSUs). It also sees opportunities in private-sector companies Astra Microwave Products and Zen Technologies.
In a recent report, DAM Capital said the sector was moving beyond an order-driven expansion phase towards growth led by technology, capabilities and manufacturing capacity. A pipeline of major defence procurement programmes awaiting final approvals could provide additional visibility for companies supplying aircraft, submarines, missile systems and associated components.
HAL remains DAM Capital's top pick among DPSUs, followed by MIDHANI and BDL, reflecting their respective positions in aircraft, specialised aerospace materials and missile systems.
Bharat Dynamics: For BDL, DAM Capital listed a target price of ₹1,560, indicating an upside potential of 39%. The company had an order book of approximately ₹261.8 billion at the end of FY26, providing four to five years of execution visibility. Its near-term pipeline includes QRSAM, heavyweight torpedoes and air-to-air missiles. The brokerage also highlighted BDL's efforts to improve execution after technical issues and supplier-quality problems affected deliveries in FY26.
DAM Capital said in its report: "BDL is entering a strong execution phase, with FY27 revenue targeted at ~ ₹55bn and a longer-term goal of ₹100bn by FY30, supported by a robust ~ ₹262bn order book providing 4–5 years of visibility and a ~ ₹150bn near-term pipeline across QRSAM, heavyweight torpedoes and air-to-air missiles."
Hindustan Unilever: For HAL, the brokerage report listed a target price of ₹5,940, indicating an upside potential of 22%. The company's Tejas Mk1A programme is approaching the final stages before induction, although radar and missile integration issues and final regulatory clearance remain important milestones. The report noted that HAL had 27 Tejas Mk1A airframes ready, with 10 GE F404 engines received and four more in transit at the time of the assessment.
Beyond Tejas, HAL's growth opportunities include the HTT-40 trainer, Dhruv NG helicopters, the CATS Warrior programme and the proposed LCA LIFT trainer. Expanding engine manufacturing capacity could also help support production over the medium term.
Mishra Dhatu Nigam: MIDHANI, meanwhile, is positioned to benefit from rising demand for titanium alloys, superalloys and specialised steels used in fighter aircraft, aero-engines, space and naval platforms. The report listed a target price of ₹475, implying an over 8% potential upside. Its opportunities include import substitution, aerospace certifications, modernisation spending and potential orders from global aerospace manufacturers.
DAM Capital noted: “MIDHANI is well positioned for sustained growth, supported by its strong competitive moat in strategic materials, expanding aerospace and defence applications and rising import-substitution opportunities. The company’s integrated capabilities across superalloys, titanium alloys and special steels, 500+ grades, stringent customer qualification requirements and advanced manufacturing infrastructure create high entry barriers.”
DAM Capital sees defence electronics as a structural growth opportunity, with the market expected to grow at over 15% CAGR over the medium term, driven by domestic production, import substitution and exports. The brokerage favours Astra Microwave Products and Zen Technologies, given their exposure to radar, electronic warfare, counter-drone and simulation technologies. Solar Industries remains on its watchlist following its recent acquisition.
Drones are another growth driver, with a proposed ₹200 billion Fast Track Procurement programme covering unmanned aerial vehicles, loitering munitions and surveillance systems. Deliveries could begin over the next 18–24 months.
DAM Capital said: “The defence procurement pipeline remains a key medium-term order catalyst, with several large-ticket programmes across the three services awaiting CCS approval/final government clearance.”
The brokerage estimates that proposed programmes, including 114 Rafale fighters, six P-75(I) submarines, eight Next Generation Corvettes and QRSAM, represent a potential ₹5 trillion order opportunity. Rising aerospace capital expenditure, exports and global partnerships could further support growth, although approvals, execution and margins remain key risks.
Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior Sub Editor at LiveMint. Over the years, she has developed a reputation for sharp editorial judgement, a strong grasp of market dynamics, and the ability to translate complex financial developments into clear, engaging stories for a wide audience. <br><br> Her core areas of coverage include stock markets, leading listed companies, currencies, and commodities, with a particular strength in fast-paced, real-time market reporting. She is known for handling breaking market news, earnings-driven stock movements, and macroeconomic developments with speed, accuracy, and context—qualities that are essential in financial journalism. <br><br> Pranati has built a diverse and credible professional track record across some of India’s most respected news organisations, including MintGenie, CNBC-TV18, Business Standard and EconomicTimes.com. During her stints at these platforms, she produced data-driven market stories, curated and steered live blogs during volatile trading sessions, and conducted interviews with market veterans, fund managers, economists, and industry experts. Her work often combines on-ground reporting with analytical depth, helping readers make sense of daily market fluctuations and longer-term trends. An alumnus of the Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi, Pranati brings a strong academic foundation to her journalism. She specialises in real-time financial reporting, with a keen focus on precision, balance, and insight, aiming to decode market movements in a way that is both informative and accessible to readers across experience levels.
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