India's defence stocks are expected to deliver a positive September quarter, with improved execution likely to drive revenue growth even as the sector moves from an order-book build-up phase towards actual deliveries, according to brokerage firm Motilal Oswal. That transition matters because revenue in this phase depends less on fresh announcements and more on how quickly companies convert existing backlogs into deliveries — making the pace of execution the central focus when the companies report their numbers.

The projections come ahead of the September quarter earnings of the country's three major defence manufacturers — Bharat Electronics, Hindustan Aeronautics and Bharat Dynamics. India's financial year runs from April to March, which places the July–September period in the first half of FY2027.

The brokerage expects healthy defence order inflows to continue, noting that approvals by the Defence Acquisition Council (DAC), the government body that clears capital acquisitions for the armed forces, have reached approximately ₹1.6 lakh crore so far in FY2027. Going ahead, the execution of existing orders, fresh order inflows and a rising contribution from exports will remain the key monitorables for the sector.

BEL Remains Top Pick

Among the three major defence stocks, Motilal Oswal expects state-owned defence electronics major Bharat Electronics Ltd. (BEL) to remain its top pick, forecasting revenue growth of around 16% year-on-year, supported by the execution of its ₹72,000-crore opening order book — the backlog the company carried into the period. However, margins could moderate to approximately 27.7% due to an unfavourable product mix.

HAL Seen Delivering Steady Growth

Hindustan Aeronautics Ltd. (HAL), the state-run aerospace and defence manufacturer, is expected to report revenue growth of around 14% year-on-year, with margins improving by 100 basis points — equivalent to one percentage point — to 24.5%. Growth is expected to be driven largely by Light Combat Aircraft (LCA) Mk1 and other deliveries, while Tejas Mk1A deliveries, the upgraded variant of the LCA programme, remain a key trigger to watch.

BDL Faces a High Base

Bharat Dynamics Ltd. (BDL), which manufactures missiles and allied defence equipment, is expected to report a mixed quarter. While its sequential performance is likely to improve, revenue could decline around 19% year-on-year owing to a high base — a year-ago quarter that sets a difficult comparison. The brokerage said it will be watching order inflows for the Akash-NG missile and the Quick Reaction Surface-to-Air Missile (QRSAM) programme.

Outlook: Execution Remains the Bigger Theme

Overall, Motilal Oswal expects defence companies to report healthy revenue growth in the quarter, but believes the bigger theme is the execution of their sizeable order backlogs. BEL is expected to lead the pack, followed by an improving performance from HAL, while BDL could remain relatively weaker because of the high base. With results still ahead, the reported figures, fresh order announcements and updates on export contributions will serve as the markers of how the execution theme is progressing.

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