ICICI Securities bullish on defence sector; bets on HAL, Solar, ASTM, BEL

Analysts at ICICI Securities continue to maintain a positive outlook on the country’s defence sector, stating that order awarding is set to pick up. 

“We maintain our positive outlook on the sector and expect the order build-up to accelerate in FY27 vs. FY26. Air-defence and Navy-related segments to perform relatively better,” said Vikash Singh and Pritish Urumkar, analysts at ICICI Securities. 

Among sector players, the analysts have picked Hindustan Aeronautics, Solar Industries, Astra Microwave, and Bharat Electronics as their preferred stock picks. 

The brokerage has a Buy rating on PTC Industries and MIDHANI. It has an Add rating on Bharat Dynamics, Azad Engineering, and Zen Technologies, while maintaining a Sell rating on Dynamatic Technologies.  

 

 

Order awarding momentum to pick up in FY27/28

The brokerage pointed out that government policies remain firmly supportive, evidenced by the MoD’s ₹3 trillion capital outlay target by CY29. “This support implies a sustained double-digit CAGR in defence capex; further, with the recent Defence Procurement Manual 2025, acquisition timelines are expected to be significantly compressed,” wrote the analysts in a research note. 

Given that DAC approvals were at an all-time high in FY26, analysts expect the order awarding momentum to pick up in FY27/28, especially in aerospace, missiles, electronic warfare and drone defence/offence segments, as the fabric of warfare has changed completely in the past couple of years. 

According to the brokerage, the Navy may receive the long-awaited ₹70,000 crore submarine orders soon. 

The geopolitical backdrop, analysts believe, continues to provide a structural tailwind, as the conflict in the Middle East has reinforced defence budget urgency across GCCs. 

“Indian OEMs with established export track records or MoUs are likely to benefit disproportionality, especially in the areas of missiles, drones, aerospace, defence electronics and radars,” said the analysts.

Policy push and project milestones in May 2026

The brokerage further highlighted that among the key developments in May 2026, the Ministry of Finance has approved the P-75I (Stealth Submarine) programme, with only CCS approvals remaining for official contracting. India has signed a BrahMos deal with Vietnam. 

Bharat Electronics received cumulative orders worth ₹2,100 crore for various systems and sub-systems. Mazagon Dock Shipbuilders delivered the sixth and final stealth frigate of the P-17A programme. Garden Reach Shipbuilders & Engineers launched the first NG-OPV out of 11 ordered. Zen Technologies emerged as the lowest bidder in the remote-controlled weapon stations project of AVNL. 

The US Department of State has cleared foreign military sales to India to the tune of $428 million.

Order inflows remain robust across segments

In May 2026, order inflows and approvals remained strong across segments. Armory secured a ₹100 crore contract from the MoD for the supply of the ‘Suraksha’ counter-unmanned aerial system (C-UAS), while Bharat Electronics won a ₹150 crore order for five ground-based mobile electronic warfare systems for the Indian Army, according to ICICI Securities. 

BEL also secured a separate ₹600 crore contract for communication equipment, avionics, information fusion centre systems, coastal surveillance radar systems, seekers, jammers, tank sub-systems, laser-based fuses, simulators, medical electronics, batteries and spares, among others. 

In the private and export segment, Solar Industries secured defence export orders worth ₹1,000 crore, with deliveries scheduled over three years. Pixxel won a contract from the US National Reconnaissance Office for hyperspectral satellite imagery and remote sensing capabilities, while Zulu Defense’s Trap loitering munition secured an order from the Netherlands Special Forces, said the brokerage. 

RRP Defense secured a ₹29 crore contract from Bharat Electronics to supply high-precision germanium lenses for infrared and thermal imaging systems. Shri Refrigerations Limited won a ₹9.8 crore order for supply, installation and commissioning of cooling systems for the Indian Navy’s five fleet support ships. Zen Technologies emerged as the lowest bidder for 81 remote-controlled weapon stations for AVNL’s Armoured Recovery Vehicle contract. 

On the policy and large-ticket front, the Union Finance Ministry approved the ₹70,000 crore P-75I programme for six next-generation stealth submarines. India also signed a $632 million BrahMos deal with 

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