Defence exports rise after Operation Sindoor. Jefferies names Solar, Astra, HAL and BEL as top stock picks

India’s defence industry is entering a higher growth phase as combat deployment of indigenous weapons during Operation Sindoor strengthens the credibility of locally made systems in global markets. Jefferies expects defence exports to rise 11% annually through fiscal 2030, reaching Rs 584 billion, and identified Solar Industries, Astra Microwave, HAL and Bharat Electronics as its preferred stocks.

Indian defence exports rose 63% year-on-year (YoY) to Rs 384 billion in fiscal 2026, exceeding the government’s Rs 300 billion target, according to the brokerage. The Ministry of Defence also indicated that exports could surpass the FY29 target of Rs 50,000 crore.

The operational deployment of BrahMos and Astra missiles, Akash air defence systems, Akashteer command systems and Pinaka rockets during Operation Sindoor has improved the export credibility of Indian defence platforms, Jefferies said. These systems demonstrated combat readiness in an environment where global procurement has historically been dominated by suppliers from the US, France and Russia.


The impact is already visible in firm orders, particularly for BrahMos, including contracts with Vietnam and Indonesia. India is also in discussions with countries such as the UAE, while demand has widened across Southeast Asia, the Middle East, Africa and Latin America.

The brokerage said Indian companies could see growing interest in missiles, artillery and electronic systems following successful deliveries to Armenia. Europe’s rearmament cycle may not immediately result in large platform exports because of entrenched supplier relationships, but it could create opportunities for Indian companies as component and subsystem suppliers.

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$60 billion domestic opportunity

Jefferies estimates that India’s domestic defence opportunity could exceed $60 billion over the next four years. Domestic defence capital spending is expected to rise at a 16% compound annual growth rate between fiscal 2026 and fiscal 2030, compared with 10% growth in overall defence capital expenditure.

The indigenisation drive is being supported by positive indigenisation lists covering more than 500 platforms and systems, along with more than 5,000 key subsystems and line-replaceable units that are required to be localised by defence public-sector companies by 2032. As much as 75% of capital procurement is now earmarked for domestic sourcing.

More than $120 billion of acquisition proposals cleared during fiscal 2025-26 provide visibility for medium-term order flows, Jefferies said. The proposed Defence Acquisition Procedure 2026 could further support private-sector participation by shortening procurement timelines and shifting the system away from nomination-based orders toward competitive bidding.

Private companies are already gaining share. The revenue share of private players among key listed defence companies rose from 9% in fiscal 2023 to 16% in fiscal 2026.

Solar Industries: Rs 180 billion defence order book

Jefferies initiated coverage on Solar Industries with a Buy rating and a price target of Rs 28,160. The target implies around 31%-32% upside from the company’s recent price.

Solar’s defence business is expected to expand from 27% of sales in fiscal 2026 to 40% by fiscal 2030. Defence revenue could grow at a 42% compound annual growth rate during the period, supported by a defence order book of about Rs 180 billion.

The order book includes a Rs 61 billion Pinaka order that is expected to be executed over 10 years. Jefferies expects Solar’s earnings to grow at a 31% annual rate through fiscal 2030, while its return on equity remains above 29%.

The company has expanded beyond industrial explosives into rockets, loitering munitions, drones and other aerospace and defence products. The brokerage expects Solar’s market share in domestic defence spending and exports to rise to 4.5% by fiscal 2030 from 1.9% in fiscal 2026.

Astra Microwave: Moving up the value chain

Astra Microwave also received a Buy rating, with a price target of Rs 2,055, implying around 19% upside.

The company is transitioning from a component and subsystem supplier into a development-cum-production partner for complete systems in major defence programmes. These include the Uttam AESA radar for Tejas Mk1A aircraft, QRSAM missiles and Su-30 fighter upgrades.

Astra secured a Rs 22 billion production order from HAL in July 2026 for antenna array units for the Uttam radar. The order effectively doubled its overall order book to Rs 43 billion.

Jefferies expects Astra’s defence sales to grow at 21% annually through fiscal 2030, with overall revenue rising at 19% annually to Rs 23 billion. Operating leverage could expand EBITDA margins to 32% from 29%, while earnings are expected to grow at a 28% compound annual rate.

Faster export growth could provide additional upside, particularly as the company shifts away from low-margin build-to-print orders toward higher-value products through its Astra Rafael Comsys joint venture.

HAL and BEL remain core plays

Jefferies maintained a Buy rating on HAL with a price target of Rs 6,800, implying 39% upside. HAL is expected to deliver a 15% earnings compound annual growth rate between fiscal 2026 and fiscal 2029.

Bharat Electronics also carries a Buy rating, with a price target of Rs 490, representing 20% upside. The brokerage expects BEL’s earnings to grow at 17% annually over the same period.

Bharat Dynamics, India’s primary missile manufacturer and system integrator, was rated Hold with a price target of Rs 1,280. Although its Rs 262 billion order book provides earnings visibility, Jefferies said the valuation leaves limited room for upside. It expects BDL’s earnings per share to grow at a 30% compound annual rate through fiscal 2030, albeit from a low base.

The broader opportunity comes with valuation and execution risks. Jefferies cautioned that slower defence order-book execution, delays in new-product ramp-ups and weaker international growth could affect the earnings outlook for companies such as Solar. For Astra, a slowdown in indigenisation or technology obsolescence remains a key risk.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)