Stocks to buy: InCred bullish on HAL, BEL shares; sees up to 26% upside in these defence stocks
The Ministry of Defence's budget has roughly doubled, from ₹ 2.7 lakh crore in 2015–16 to ₹ 6.8 lakh crore in 2025–26, the highest among all ministries, accounting for 13% of the central government's total expenditure. Defence exports rose by 13x since FY16, private sector exports rose by 67x and domestic procurement share surged to 75%, with large headroom for growth.
Analysts believe that the geopolitical tensions with China and Pakistan are expected to increase government spending in the coming years.
The government's 'Make in India' initiative and policies like the Defence Acquisition Procedure 2020 prioritize domestic procurement, with approximately 75% of the modernization budget allocated to local industries.
According to InCred Equities, this focus has positioned defence PSUs as the backbone of India's defence manufacturing ecosystem, producing everything from aircraft and electronics to naval vessels and weaponry.
Among the defence PSUs, Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) stand out as the leading contributors, collectively accounting for ~50% of the total production by defence PSU companies, InCred Equities said.
HAL, a Navratna company, contributes ~27% of the production, specializing in fighter aircraft, helicopters, and avionics, including the indigenous Light Combat Aircraft Tejas and Advanced Light Helicopter Dhruv.
BEL, with a ~21% share, focuses on advanced electronics such as radars, communication systems, and electronic warfare equipment, serving both defence and non-defence sectors.
InCred Equities has initiated coverage on HAL and BEL shares with a bullish outlook. Here are the defence stock picks by the brokerage firm:
Hindustan Aeronautics' strong order book, coupled with ongoing indigenization and modernization initiatives, underpins a stable growth trajectory — EPS is forecast to rise by 16% YoY in FY26F and 18% YoY in FY27F, InCred Equities said.
The brokerage firm initiates coverage on HAL shares with a, 'Add' rating and target price of ₹ 6,325, based on a 40× P/E on Mar FY27F estimates. HAL share price target implies an upside potential of up to 26% from Monday's closing price.
Bharat Electricals' robust order book, coupled with expected orders' long-term visibility, provides strong revenue and growth confidence. The success of Operation Sindoor enhances its global standing and export potential. Aided by the government's push for indigenization, and a trusted partnership with the Ministry of Defence, BEL is well-positioned as a key beneficiary in the defence sector, InCred Equities said.
It initiated coverage with an 'Add' rating. It has BEL share price target of ₹ 459, based on a 44×P/E applied to forecasted FY27F EPS of ₹ 10.4.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Key metrics: P/E: 28.22 | 52-week high: ₹655 | Volume: 60.35K. Technical analysis: Support at ₹2,450, resistance at ₹3,600. Risk factors: High volatility, negative investor sentiment, and long-term bearish trends. Buy: CMP and dips to ₹3,100. Target price: ₹3,550-3,600 in 1 month. Stop loss: ₹3,050. Why it's recommended: MAHLOG, a prominent player in the logistics sector, has faced headwinds due to operational concerns. The prices bottomed out in March, and the steady formation of a higher low indicates that the trends are heading higher. A push above the recent set of data, forming a long body candle, is highlighting the potential to move to the upside after weeks of profit booking that had emerged. Key metrics: P/E: 57.32 | 52-week high: ₹554.70 | Volume: 170.53K. Technical analysis: Support at ₹295, resistance at ₹455. Risk factors: High logistics costs, fragmented operations, and a shortage of skilled workforce. Buy above: ₹347 and dips to ₹335. Target price: ₹380-395 in 1 month. 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It has created more than 5.75 GW of solar, wind, and hybrid assets through its publicly traded companies, KPI Green Energy, KP Energy, and KP Green Engineering. KPI Green Energy was founded in 2008 and specializes in hybrid and solar energy. Under the "Solarism" brand, it serves captive power producers in addition to developing, owning, running, and maintaining power plants as an independent power producer. As of FY25, the company has more than 5,946 acres of land bank, 2.95 GW of orders in hand, and a total installed capacity of over 950 MW. The company's operating revenue climbed from ₹1,024 crore in FY24 to ₹1,735 crore in FY25, a 69% YoY growth. As of FY25, CPP's revenue share was 87%, while IPP's revenue share was 13%. EBITDA also increased by 69% YoY from ₹343 crore in FY24 to ₹581 crore in FY25. Profit after tax increased by 101% from ₹162 crore in FY24 to ₹325 crore in FY25. 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Compared to the same quarter last year, when it recorded revenue of ₹2,179 crore, the company's Q4 FY25 revenue of ₹3,774 crore represented a 73% YoY growth. Improved operational efficiency and higher-order inflows into the wind turbine market were the main drivers of this expansion. Additionally, EBITDA increased by 80.4% YoY to ₹1,857 crore in FY24 from ₹1,029 crore the year before. The company's profit after tax was ₹2,072 crore, up more than 190% YoY from ₹714 crore in FY24. Q4FY25 profit after tax was ₹1,181 crore, a 320% increase over the same time the year before. About 0.4 GW of wind capacity was added by the company in FY25, increasing its installed capacity in India to 15.1 GW. The company's order book reached its biggest point ever, 5.6 GW, with orders up 93% from 2.9 GW in FY24. Revenue from the wind turbine generator category increased by 101% year over year to ₹8,481.31 crores in FY25. Results for the wind business in FY25 totalled ₹810.85 crore, a significant YoY increase of 1,056%. Suzlon achieved a comfortable debt position by drastically lowering its borrowings, which resulted in a debt reduction from ₹1,905 crore in FY23 to ₹283 crore in FY25. Risk Factor: Suzlon's portfolio of renewable energy is growing, but execution risks, such as project delays, difficulties acquiring land, and problems with grid integration, could affect growth goals. Dependency on government subsidies and incentives also creates unpredictability. Moreover, Suzlon's business operations and financial performance may be impacted by modifications to laws, since the electricity industry's highly regulated tariffs or environmental standards. It could be necessary to make additional capital investments to comply with changing regulations, such as pollution control standards. Trade Brains Portal is a stock analysis platform. Its trade name is Dailyraven Technologies Pvt. Ltd, and its Sebi-registered research analyst registration number is INH000015729. MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. Its trade name is William O'Neil India Pvt. Ltd, and its Sebi registration number is INH000015543. Raja Venkatraman is the co-founder of NeoTrader. His Sebi-registered research analyst registration no. is INH000016223. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
