Own BEL, MIDHANI shares? Analysts see 3 potential beneficiaries from defence sourcing buzz

Homegrown defence suppliers, especially military-grade material makers, are likely to gather steam on Dalal Street. According to sources, defence suppliers could emerge as the next big theme within the country's Make-in-India story, with the Ministry of Defence stepping up its focus on domestic defence manufacturing, with officials now working on a framework aimed at encouraging the procurement of indigenous defence materials.

Officials are learned to be working on a framework to incentivise manufacturers dealing in niche military-grade materials, with an aim to promote indigenous defence material procurement. The initiative is aligned with the central government's broader goal to reduce the country's dependence on imports under its 'Atmanirbhar Bharat in Defence' (self-reliant India in defence) vision.

The framework is aimed at strengthening domestic supply chains by encouraging original equipment makers (OEMs) and contract manufacturers (CMs) to procure materials from domestic suppliers, said one of the sources.

1 Navratna & 1 Miniratna PSU on investors' radar

Analysts are betting big on three stocks as potential beneficiaries: Bharat Electronics Ltd (BEL), Mishra Dhatu Nigam (MIDHANI) and Bharat Forge.

BEL -- a Navratna central public sector enterprise (CPSE) -- deals in defence forgings, artillery and aerospace components, Mishra Dhatu Nigam (MIDHANI) -- a Category I Miniratna PSU -- operates in special alloys, titanium alloys and defence-grade materials, and Bharat Forge -- a Kalyani Group private sector firm -- specialises in defence electronics and systems.

'Swadeshi' takes centre stage with domestic defence manufacturing in spotlight

According to sources, the development can indirectly boost demand for indigenously prouduced military grade material sourcing in 2026, with the defence ministry's broader focus on domestic defence manufacturing.

The Defence Acquisition Procedure in this regard can be initiated over the next 30-40 days, said the sources.

The issuance of Defence Acquisition Procedure (DAP) marks an essential step in capital defence procurement in the country, as it prioritises indigenously designed, developed and manufactured equipment. The DAC rulebook defines how the country's Armed Forces procure military equipment, technology, platforms and services.

Issued by the Ministry of Defence, the procedure lays down procurement policies, approval processes, vendor requirements and indigenisation norms -- crucial in shaping the country's defence spending, influencing procurement timelines and determines the extent of domestic manufacturing in this area.

Stocks in News: Bharat Electronics, Mishra Dhatu and Bharat Forge

In Thursday's trade, the three stocks attracted buying interest in an otherwise muted Mumbai market, before one slipped into the red. Mishra Dhatu Nigam (MIDHANI) shares rose by Rs 26.5 -- or 6.3 per cent -- for the day to close at Rs 443.40 apiece on BSE, their biggest intraday gain since May 13.

BEL shares gained 0.8 per cent to close at Rs 409.9 while Bharat Forge slipped 0.2 per cent to settle at Rs 1,932.

At these levels, the MIDHANI stock has rallied more than 30 per cent so far this year, while Bharat Forge shares have surged 31.9 per cent. BEL has risen 3.1 per cent during this period.

Market benchmark Nifty 50 has declined 10.4 per cent on a year-to-date (YTD) basis.