Planning to buy defence stocks? Motilal Oswal top 5 picks with 38% return potential - Full list

Defence Stocks to BUY: Defence spending is likely to remain in focus as escalating geopolitical tensions in the Middle East push countries to prioritise security and military preparedness.

According to Motilal Oswal Securities Ltd (MOFSL), India’s defence sector is well-positioned to benefit from rising domestic procurement and growing export opportunities.

“India’s defence companies are well placed to benefit from rising global demand and the government’s push for indigenisation,” MOFSL said.

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Global Demand and Exports

The Middle East accounted for 26 per cent of global arms imports in FY25. Rising conflicts in the region could further increase demand for missiles, air-defence systems, surveillance technologies, and electronic warfare solutions.

Along with higher defence allocations by NATO countries and India, domestic defence companies are expected to see an increase in the total addressable market. MOFSL expects companies like Bharat Electronics, Bharat Dynamics, Solar Industries, Astra Microwave and Zen Technologies to benefit from this trend.

Supply Chain Challenges

India relies heavily on Israel for critical defence components, including air defence and sensors for missiles and radars. MOFSL noted that a prolonged conflict in the Middle East could affect supplies of these components and delay execution of certain defence platforms.

Bharat Electronics Share Price Target

MOFSL maintains a positive stance on Bharat Electronics. The stock is currently trading at Rs 458 and has a target price of Rs 520, implying an upside of about 13 per cent. “Near-term opportunities include LCA Mk-1A systems, Shatrughat EW and next-generation corvettes. We expect steady order inflows from these programs,” MOFSL said.

Hindustan Aeronautics (HAL) Share Price Target

HAL is currently at Rs 3,989, and MOFSL has set a target of Rs 5,500, giving an upside of nearly 38 per cent. The company is expected to begin deliveries of Tejas Mk-1A and has secured orders for Dornier-228, Dhruv-NG and ALH Mk-III helicopters. “Strong visibility of order finalisation over the next 15–18 months supports growth,” MOFSL said.

Bharat Dynamics (BDL) Share Price Target

BDL is trading at Rs 1,336 with a target of Rs 1,800, implying a potential upside of about 35 per cent. MOFSL said, “BDL is targeting orders worth Rs 20,000 crore over the next 18 months from a pipeline of Rs 50,000 crore, supported by advanced trials of Akash-NG and other missile systems.”

Astra Microwave Products Share Price Target

Astra Microwave Products is at Rs 1,008 with a target price of Rs 1,150, giving an upside of around 14 per cent. “The company remains well positioned for QRSAM and electronic warfare-linked opportunities, with a long-term pipeline of Rs 25,000 crore,” MOFSL said.

Zen Technologies Share Price Target

MOFSL maintains a neutral view on Zen Technologies. The stock is trading at Rs 1,435 with a target of Rs 1,400, implying a small downside of about 2 per cent. “Zen expects a simulator order of Rs 60 crore, lifting its order book from Rs 1,430 crore to Rs 2,000 crore, largely executable over 18 months,” MOFSL said.

Defence Sector Outlook

The Union Budget for FY27 has increased capital outlay on defence by 18 per cent to Rs 2,20,000 crore, providing funding visibility for projects approved so far in FY26.

With strong order books, government support for indigenisation, and rising global demand, MOFSL expects a positive growth trajectory for major defence companies, while noting that short-term risks from supply chain disruptions may affect some programs.