5 Defence stocks recommended by Motilal Oswal for an upside of up to 38%

Synopsis: Motilal Oswal has recommended select defence stocks like BEL, HAL and Bharat Dynamics, citing strong growth potential of up to 38%, supported by ₹79,000 crore fresh approvals in the latest DAC meeting and total defence clearances of ₹3.3 lakh crore.

India’s defence sector is back in focus after brokerage firm Motilal Oswal highlighted five defence stocks that could deliver up to 38 percent upside in the coming years. This optimism comes at a time when the government is pushing hard on defence modernisation, creating strong long-term opportunities for both public and private defence companies.

Motilal Oswal’s positive view follows the Defence Acquisition Council (DAC) meeting held on Monday. During the winter session, the council approved defence proposals worth Rs. 79,000 crore. With this, total approvals now stand at a massive Rs. 3.3 lakh crore, which is almost double India’s annual defence capital outlay of Rs. 1.8 lakh crore. This clearly shows the government’s commitment to strengthening the country’s defence capabilities.

The approvals cover a wide range of defence needs. These include munitions, missiles, air defence systems, surveillance and communication equipment, training systems, and naval support platforms. According to Motilal Oswal, this balanced approach ensures that all three defence forces, such as the Army, Navy and Air Force, benefit from steady modernisation.

Although these approvals do not turn into immediate orders, they significantly reduce uncertainty around future business. Motilal Oswal believes the size and scope of these approvals de-risk order inflows for major defence PSUs and select private companies over the next two to four years, making the sector attractive for long-term investors.

Here are a few defence stocks recommended by Motilal Oswal with a high growth potential of up to 38 percent:

Bharat Electronics Limited

With a market capitalization of Rs. 2,90,015.48 crore, the shares of Bharat Electronics Limited were currently trading at Rs. 396.75 per equity share, down nearly 0.74 percent from its previous day’s close price of Rs. 399.70. 

Motilal Oswal, a prominent brokerage firm, has recommended a “Buy” call on Bharat Electronics Limited with a target price of Rs. 500 per share, indicating an upside potential of 26.02 percent.

Bharat Electronics Limited is engaged in manufacturing defence electronics like radars, communication systems, electronic warfare gear, avionics, and opto-electronics for the Indian armed forces, space, and civilian sectors. Headquartered in Bangalore, it supports the Navratna PSU status with global exports.

Hindustan Aeronautics Limited

With a market capitalization of Rs. 2,93,057.21 crore, the shares of Hindustan Aeronautics Limited were currently trading at Rs. 4,382 per equity share, down nearly 0.13 percent from its previous day’s close price of Rs. 4,387.70. 

Motilal Oswal, a prominent brokerage firm, has recommended a “Buy” call on Hindustan Aeronautics Limited with a target price of Rs. 5,800 per share, indicating an upside potential of 32.36 percent.

Hindustan Aeronautics Limited is engaged in designing, manufacturing, repairing, and upgrading aircraft, helicopters, aero-engines, avionics, and aerospace structures for defence and civil aviation. Based in Bengaluru, it serves the Indian military with products like LCA Tejas and serves international clients.

Bharat Dynamics Limited

With a market capitalization of Rs. 53,320.18 crore, the shares of Bharat Dynamics Limited were currently trading at Rs. 1,454.60 per equity share, down nearly 0.80 percent from its previous day’s close price of Rs. 1,466.40. 

Motilal Oswal, a prominent brokerage firm, has recommended a “Buy” call on Bharat Dynamics Limited with a target price of Rs. 2,000 per share, indicating an upside potential of 37.50 percent.

Bharat Dynamics Limited is engaged in producing missiles, torpedoes, anti-tank guided missiles, and underwater weapons, plus refurbishment for the Indian armed forces. As the sole PSU manufacturer, it operates from Hyderabad, Bhanur, and Visakhapatnam facilities.

Astra Microwave Products Limited

With a market capitalization of Rs. 9,407.15 crore, the shares of Astra Microwave Products Limited were currently trading at Rs. 990.80 per equity share, rising nearly 1.48 percent from its previous day’s close price of Rs. 976.35. 

Motilal Oswal, a prominent brokerage firm, has recommended a “Buy” call on Astra Microwave Products Limited with a target price of Rs. 1,100 per share, indicating an upside potential of 12.66 percent from its previous day’s close price of Rs. 976.35. 

Astra Microwave Products Limited is engaged in designing and manufacturing RF/microwave components, radar systems, communication equipment, and electronic warfare solutions for the defence, aerospace, and telecom sectors. Hyderabad-based, it focuses on indigenous high-tech systems.

Zen Technologies Limited

With a market capitalization of Rs. 12,259.62 crore, the shares of Zen Technologies Limited were currently trading at Rs. 1,357.80 per equity share, down nearly 0.77 percent from its previous day’s close price of Rs. 1,368.35. 

Motilal Oswal, a prominent brokerage firm, has recommended a “Neutral” call on Zen Technologies Limited with a target price of Rs. 1,400 per share, indicating an upside potential of 3.11 percent.

Zen Technologies Limited is engaged in developing training simulators, anti-drone systems, live/virtual simulation, and combat training solutions for armed forces, police, and security agencies. Headquartered in Hyderabad, it exports worldwide with counter-drone expertise.

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