The Defence Acquisition Council recently approved additional Approvals of Necessity (AoNs) worth ₹2.38 lakh crore to enhance the surveillance, combat, and long-range strike capabilities of India’s defence forces. These approvals strongly support indigenization and provide a massive addressable market for domestic defense players.
From S-400 to Aero-Engines: The Modernisation Checklist
While the exact budget breakdown for each individual item within this package is not provided, it includes the following products:
- Additional units of the S-400 long-range surface-to-air missile system.
- 155mm Dhanush howitzer gun systems.
- Approximately 60 Medium Transport Aircraft to replace the IAF’s aging AN-32 and IL-76 transport fleet.
- Air defense tracked systems for the Army.
- Armor-piercing tank ammunition.
- High-capacity radio relay systems.
- Runway-independent aerial surveillance systems.
- Remotely piloted strike aircraft for the Air Force.
- Overhaul of Su-30 aero engine aggregates to extend the service life of the combat aircraft.
- Heavy-duty air-cushion vehicles for the Indian Coast Guard to be used in coastal patrolling and search-and-rescue operations.
In addition, there are several other specific defense projects and orders for which the budget has been disclosed. These include the ₹62,700 crore ‘Prachand’ Light Combat Helicopters, the Next-Generation Corvette Program (₹40,000 crore), the Quick Reaction Surface-to-Air Missile (₹30,000 crore), and the Advanced Light Helicopters (₹2,900 crore).
Against this backdrop, this article focuses on the three big beneficiaries from the budget.
#1 Bharat Electronics: The Lead Integrator for India’s ₹30,000 Crore QRSAM Ambition
The pipeline creates a multi-layered opportunity for Bharat Electronics, due to its deep integration into air defence, communication, and surveillance ecosystems. BEL’s expertise lies in deep indigenisation, system integration, and advanced electronics manufacturing. It is deeply involved in missile systems, radar, surveillance, and electronics warfare.
BEL’s Q1FY27 Roadmap: Navigating the Surge in Air Defence Electronics
Thus, BEL is particularly expected to benefit from Air defence tracking systems for the Army and High-capacity radio relay systems. The Quick Reaction Surface-to-Air Missile (QRSAM) is a highly complex air defense project for which BEL is the lead bidder for both the Army and Air Force versions.
The QRSAM Tailwind
In this program, BEL functions as the lead system integrator. The missile component itself, which accounts for around 30% of the total order value, is subcontracted to Bharat Dynamics. BEL, alongside its industry partners, will execute the remaining 70% of the system. BEL is highly confident of securing the QRSAM order by the first quarter of FY27.
BEL is also involved in multiple iterations of the Akash air defence system. It is currently executing orders for the Akash system, including the Akash Army version. For Akash Prime, BDL is the lead bidder, while BEL handles the production of specific items, testing, and integration.
Akash-Next Generation is an upgraded version. Post-trial completion, this version was moving toward approval, as per Q3FY26 management commentary. Army version is handled by BDL, while BEL is the lead bidder for the Air Force version of Akash-NG.
Management estimates the order size to be between ₹2,500 crore and ₹3,000 crore. It anticipates receiving the confirmed order by FY28. The Long Range Surface-to-Air Missile is another major ongoing air defence project.
It is currently one of BEL’s largest major orders under execution, and the company expects to complete it within the next 1-1.5 years. With the new approval and considering the importance of missiles in modern warfare, additional orders may be received.
Radar Domination: Why Arudhra and Ashwini Define BEL’s Near-Term Pipeline
In addition, tracking systems rely heavily on advanced radar infrastructure. BEL’s portfolio includes several major tracking and surveillance radars, like Arudhra Medium Power Radar, Ashwini Radar, and Uttam Radar. Arudhra and Ashwini are major constituents of the current execution pipeline and order book today.
However, the Uttam Radar order volume depends on Hindustan Aeronautics finalizing the configuration for 97 new aircraft and deciding the mix of indigenous Uttam radars versus foreign alternatives. In addition, the defence electronics developed by BEL are closely related to radio frequency applications.
The ₹15,000 Crore Corvette Opportunity: BEL’s Edge in Naval Tech
BEL is also positioned to benefit from the Indian Navy’s next-generation corvette program. The programme worth ₹40,000 crore (8 ships) has received Cabinet approval. It has already been concluded with the government at the GRSE and Goa Shipyard levels.
Currently, the program is in the final stages of negotiations. BEL is slated to secure the orders for the electronic suites and onboard defence systems. Its share from this program is estimated at ₹12,000 crore to ₹15,000 crore, with orders expected to materialize by the first half of FY27.
Project Kusha: Inside BEL’s High-Stakes Development of the ‘Indian S-400
Further, design and ground validation trials for Project Kusha have also been completed. It is actively being developed as an indigenous equivalent to the S-400 air defence system. With trials completed, this will move forward to flight evaluations in the near- to medium-term.
In fact, this is one of the most significant and largest upcoming defence initiatives currently being pursued by BEL. This project is expected to yield a massive order akin to the scale of the QRSAM program. It expects the confirmed order to materialise around 2029. Refer to this story for more information on BEL financials.
BEL Share Price
#2 Hindustan Aeronautics: Powering Su-30 Service Life and the ₹62,700 Crore LCH Wave
The AoN includes key projects that align closely with Hindustan Aeronautics’ (HAL) capabilities. It approved the overhaul of the Su-30 aero engine aggregates. This initiative aims to extend the service life of the Indian Air Force’s (IAF) mainstay combat aircraft.
Reviving the Su-30 Fleet with the AL-31FP Engine Overhaul
The aero engine powering the Su-30MKI fighter aircraft is the AL-31FP, which is currently a major focus of HAL’s manufacturing and maintenance. The Defence Ministry signed a contract with HAL in September 2024 to supply 240 AL-31FP aero-engines to the Indian Air Force.
In addition to producing new units, HAL plays a key role in the lifecycle support of the Su-30MKI fleet through the Repair and Overhaul of both the aircraft and the AL-31FP engines. To ensure timely deliveries and meet the ongoing requirements, HAL is actively ramping up its production capacity in phases.
HAL vs Global Giants: The Fight for the IAF’s 60-Medium Transport Order
In addition, the DAC has also approved the procurement of approximately 60 medium transport aircraft. These aircraft will replace the IAF’s aging transport fleet (AN-32 and IL-76) to fulfill operational airlift requirements. For this order, HAL is expected to face competition from international players as well.
HAL previously engaged in a major international initiative to build an aircraft in this class. It formed a joint venture, Multirole Transport Aircraft, with Russian partners. It was specifically tasked with the preliminary and detailed design, production of prototypes, and flight testing of a Multirole Transport Aircraft.
Strike UAVs: How HAL is Pivoting to Remotely Piloted Combat Systems
Furthermore, the DAC also granted approval for remotely piloted strike aircraft for the Air Force. This also supports HAL’s presence in UAV development and aerospace systems, reinforcing its role across both manned and unmanned aviation programs.
The ₹62,700 Crore LCH Wave
Beyond that, the Ministry of Defence has awarded HAL a contract for 6 ALH Mk-III helicopters worth ₹2,900 crore. It has also received clearance for the LCH Prachand order, worth ₹62,700 crore, which was awarded to the company last year. On 28 March 2025, HAL received a contract to supply 156 LCH Prachand units to the Indian Armed Forces.
Refer to this story for more information on HAL’s financials.
HAL Share Price
#3 Bharat Dynamics: Capturing the ₹20,000 Crore Missile Surge
Approved categories also directly overlap with Bharat Dynamics (BDL) manufacturing expertise. BDL is a primary manufacturer of Surface-to-Air Missiles for the Indian Armed Forces, just like BEL. Thus, the ₹30,000 crore budget for QRSAM and tracked air defence systems is expected to benefit BDL.
The QRSAM Sub-Contract: Why BDL is Essential to the Army’s Air Defence
BDL notes that it anticipates receiving new orders worth ₹20,000 crore over the next 2-3 years. The QRSAM and broader air defense push represent highly relevant business opportunities for BDL. Its portfolio already includes the Akash Weapon System, Medium-Range SAMs, and Vertical-Launch Short-Range SAMs.
90% Indigenisation: How BDL is De-risking India’s Surface-to-Air Shield
Notably, it has successfully completed the first off-production model for the advanced Akash weapon systems. Following this, BDL is expected to commence deliveries of these systems to the Indian armed forces in the near term. It also manufactures Akash and Astra missile systems with 90% local components.
ATGM Dominance: BDL’s Crucial Role in India’s Armoured Warfare Shift
The approval also includes Armor-Piercing and Anti-Tank Systems. To this end, BDL is a leading manufacturer of Anti-Tank Guided Missiles (ATGMs), including the Milan-2T, Konkurs-M, INVAR, and NAG systems. The modernization of ground-based armored warfare directly supports BDL’s ATGM production lines.
The Telangana Expansion: Scaling BDL for a 5-Year Order Sprint
To capitalise on the strong order pipeline, BDL is commissioning new facilities in Telangana. This will feature a rocket motor testing facility, support for new weapon systems, and warhead penetration testing capabilities. Its Jhansi facility will be dedicated to the manufacturing of grad rockets.
BDL Share Price
Efficiency vs. Valuation: Decoding the Defence Sector’s Premium Pricing
BEL’s return ratios (Return on Capital Employed and Return on Equity) are the strongest among all three, followed by HAL and BDL. In terms of valuation, BEL and HAL are trading at a premium relative to their industry multiples, but at a discount to their historical median. BDL continues to trade at a premium to both historical and industry multiples.
| Valuation Comparison (X) | ||||
| Company | P/E | 5Y Median P/E | RoCE (%) | RoE (%) |
| BEL | 54.2 | 31.5 | 38.9 | 29.2 |
| HAL | 30.9 | 22.1 | 33.9 | 26.1 |
| BDL | 85.1 | 58.4 | 19.7 | 14.4 |
| Industry Median | 57.5 | – | 18.7 | 14.4 |
| source:screener.in (Data as of 10 April 2026) | ||||
The ₹2.38 lakh crore defence push creates a strong multi-year pipeline for BEL, HAL, and BDL. There are visible opportunities across ₹30,000 crore in QRSAM, ₹40,000 crore in corvettes, and ₹65,000 crore in LCH orders. These orders are expected to once again accelerate the Ministry of Defence’s order awarding speed.
This is expected to support the order book of defence players, which has declined of late. While execution and order inflow remain key, despite elevated valuations across all three players. It’s worth keeping these stocks in your watchlist.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted, and widely used source of information.
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About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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