HAL, BEL, Data Patterns: Jefferies sees up to 32% upside in these defence stocks; should you buy?
Global brokerage Jefferies, in its recent report on the Indian economy, recommended 3 defence heavyweights for momentum in the current market. Jefferies is bullish on India’s strategic shift towards indigenisation and growing private sector participation in large-scale defence projects. Here's a quick breakdown of the 3 stocks you might need in your portfolio to see a 32 per cent upside:
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India's defence budget growth hits 25% YoY
- Defence spending jumped 25 per cent in March 2025, with FY26 capex already up 122 per cent YoY in April.
- This aggressive spending is expected to funnel into PSU and private defence firms.
Bharat Electronics (BEL)
- With a target price of Rs 420 (upside: 3.1 per cent), BEL continues to be a preferred PSU pick.
- Jefferies believes BEL’s long-term contracts, export opportunities, and leadership in radar and communication systems keep its fundamentals solid.
Export target: Rs 50,000 crore by FY30
India plans to double defence exports from Rs 23,600 crore in FY25 to Rs 50,000 crore by FY30. Key platforms like BrahMos, Akash, and Tejas are being marketed globally.
Hindustan Aeronautics (HAL)
- Jefferies has set a target price of Rs 6,475 for HAL, indicating a 31.6 per cent upside.
- With robust order visibility, leadership in aerospace manufacturing, and a strong R&D pipeline, HAL remains the top PSU play in India's defence growth.
Global tailwinds: NATO may boost defence spending
- NATO countries are proposing to raise defence budgets to 5% of GDP.
- A 1% global GDP shift to defence could mean $530 billion in additional annual spending, creating a strong global demand pipeline.
Data Patterns
- Jefferies sees a 13.9 per cent upside in Data Patterns, with a target price of Rs 3,400.
- Known for its high-margin, indigenously developed products in aerospace and defence electronics, the firm is expected to benefit from increased private participation in key projects.
Private sector's rising share in Indian defence
- Jefferies notes that the private sector’s share in listed defence firms rose to 14% in FY25, from 9% in FY22.
- Participation in high-value projects like the Advanced Medium Combat Aircraft (AMCA) signals the shift from PSU monopoly to competitive growth.