Bharat Electronics and Bharat Dynamics may gain from ₹1 lakh crore defence push: Elara Capital

The Defence Acquisition Council’s (DAC’s) recent approval of capital acquisition proposals worth ₹1.05 lakh crore could lead to strong order inflows for Bharat Electronics (BEL) and Bharat Dynamics (BDL), according to Harshit Kapadia, Vice President at Elara Capital.The approvals fall under the ‘Buy (Indian-indigenously designed, developed and manufactured)’ category, which focuses on equipment designed, developed, and manufactured indigenously. Of the 10 projects cleared, Kapadia highlighted three major proposals that are likely to benefit key companies.

The first is the surface-to-air missile system, believed to be the Quick Reaction Surface-to-Air Missile (QRSAM), with an estimated value of ₹30,000 crore. “The key beneficiaries of this project are Bharat Electronics, Bharat Dynamics, and Astra Microwave,” Kapadia said.

The second major project is the Mine Counter Measure Vessel (MCMP), worth over ₹40,000 crore. Goa Shipyard is expected to lead the execution of 12 such vessels. Another proposal involves armoured recovery vehicles, estimated at ₹4,000 crore, with BEML, Armoured Vehicles Nigam Limited (AVNL), and Bharat Forge expected to benefit. The moored mines project, worth around ₹4,000–4,500 crore, could support order inflows for Bharat Dynamics and Apollo Micro Systems.

Electronic warfare systems and related smaller projects may also benefit Bharat Electronics, Data Patternsand Astra Microwave.

While QRSAM was anticipated, the rest of the projects came as a surprise. “QRSAM was anticipated within the 10, but others were not,” Kapadia noted. He added that it usually takes 12–18 months for such approvals to convert into firm orders.

Also Read | Defence stocks rebound: Bharat Dynamics, HAL shares rise as NATO agrees to boost defence spendingKapadia expects order books to improve for Bharat Dynamics and BEL, adding that BEL is involved in many systems either directly or indirectly.

He maintained a positive view on Hindustan Aeronautics Ltd (HAL) among public sector undertakings (PSUs) and Zen Technologies on the private side. While delays in quarter four and quarter one have impacted order flow, Kapadia expects a pickup in quarter two. He projects around 10% revenue growth for defence companies this year, though execution in the second half may be slower due to a low order base.

On the drone segment, he said the government is focused on incentivising local manufacturing. “The government is looking to further incentivise, apart from the earlier production-linked incentives (PLI),” he said, noting that the market remains fragmented with no single dominant player.

Among his top picks, Kapadia listed Hindustan Aeronautics and Bharat Electronics on the PSU side, and Zen Technologies and Solar Industries among private players.

For the full interview, watch the accompanying video

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