3 Defence Stocks Likely to Benefit After DAC Clears ₹52,000 Cr Defence Procurement

Synopsis: The Defence Acquisition Council’s ₹52,000 crore approvals are set to boost defence stocks. Motilal Oswal highlights Bharat Electronics Limited, Hindustan Aeronautics Limited, and Astra Microwave Products Ltd as key beneficiaries, expecting strong order inflows from missiles, UAVs, and electronic warfare programs, supporting long-term growth visibility.

Defence stocks are in the spotlight on Monday following the Defence Acquisition Council’s (DAC) approval of capital procurement proposals worth around Rs. 52,000 crore, boosting hopes of new domestic orders in areas such as missile systems, drones, electronic warfare, and surveillance platforms.

The most recent defense defense defense defense defense order inflows are included in the acquisitions. According to brokerage Motilal Oswal, these approvals improve income visibility for domestic defense industries and further broaden the procurement pipeline created over the last two years.

DAC Approves Significant Defence Procurement for All Three Armed Services

The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, has approved major capital procurement proposals for the Indian Army, Navy, and Air Force. The clearance aims to strengthen India’s overall defence preparedness by enhancing air defence, surveillance, electronic warfare, and communication capabilities across all three services.

The AKASH TARANG anti-drone electronic warfare system, Man Portable Anti-Tank Guided Missile (MPATGM), Medium Range Surface-to-Air Missile (MRSAM), Very Short Range Air Defence System (V-SHORADS), Active Protection Systems for tanks, and jet-based kamikaze drones are among the approved systems for the Indian Army. These systems are meant to increase battlefield protection, counter drone threats, and boost armored security.

For the Indian Navy, the DAC has cleared Multi Influence Ground Mines (MIGM), Naval Shipborne Unmanned Aerial Systems (NSUAS), and a Land-Based Testing Facility for electric propulsion systems. A Fixed-Wing High Altitude Pseudo Satellite (FW-HAPS) and other devices to improve intelligence, surveillance, reconnaissance (ISR), and communication capabilities have been approved for the Air Force.

Here are the three stocks it recommends buying by Motilal Oswal:

Bharat Electronics Limited

Bharat Electronics Limited (BEL) is a Government of India-owned defence electronics company under the Ministry of Defence. It is primarily engaged in designing, developing, and manufacturing advanced electronic systems for the armed forces, including radars, communication systems, electronic warfare equipment, and missile-related electronics.

Bharat Electronics Limited (BEL) has received a positive outlook from Motilal Oswal, which has assigned it a “buy” rating with a price target of Rs. 510, implying a 22% upside from the previous closing price. The brokerage also considers BEL its top pick in the defence electronics space, valuing the stock at about 45 times its estimated earnings over the next two years.

The anticipated huge defense orders are a major source of hope. In the upcoming weeks, BEL is anticipated to get contracts for Quick Reaction Surface-to-Air Missiles (QRSAM) valued at approximately Rs. 30,000 crore, with further orders anticipated after that.

Additionally, the Rs. 90,000 crore P-75I submarine project is in the advanced stages of negotiations, and a contract signature is anticipated by September. In order to enhance its long-term order pipeline, BEL hopes to secure between 50 and 60 percent of the electronics segment, which is expected to account for about 30 percent of the project’s total value.

Hindustan Aeronautics Ltd

Hindustan Aeronautics is a leading Indian aerospace and defence company owned by the Government of India. It is primarily engaged in the design, development, manufacture, and maintenance of aircraft, helicopters, engines, and related systems for both military and civil aviation needs.

Hindustan Aeronautics has received a positive outlook from brokerage Motilal Oswal, which has maintained its “buy” rating with a price target of Rs. 5,500, implying a 24% upside from the previous closing price. The firm has valued HAL at 30 times its estimated earnings over the next two years, indicating strong confidence in its future growth prospects.

As part of the judgments made on July 3, the brokerage also identified HAL as a significant prospective beneficiary of the recently announced Naval Shipborne Unmanned Aerial Systems (NSUAS) program. This indicates anticipated benefits from higher defense spending and domestic UAV development prospects in the upcoming years.

Astra Microwave Products Ltd

Astra Microwave Products is an Indian technology company specializing in the design and manufacture of high-frequency and radio frequency (RF) systems used in defence, space, and telecom applications. It supplies critical components such as radar systems, satellite communication equipment, and electronic warfare solutions.

Astra Microwave Products has received a positive outlook from brokerage Motilal Oswal, which has maintained a “buy” rating on the stock with a price target of Rs. 1,715. The valuation implies around 42 times its estimated two-year forward earnings, reflecting strong expectations of growth in the defence electronics space.

The brokerage also highlighted the company as a prospective beneficiary of critical defence initiatives such as the Anti-Unmanned Aerial Vehicle Electronic Warfare system “Akash Tarang” and Active Protection Systems for tanks. Astra Microwave Products might also boost its long-term order pipeline by taking part in QRSAM orders through TR modules and electronic warfare subsystems.

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