BEL, Solar Industries and PTC see up to 46% increase, says Goldman Sachs amid Rs 790 billion defense push

Goldman Sachs has turned bullish on India’s defense manufacturing sector, naming PTC Industries, Bharat Electronics and Solar Industries among its top picks, after the Defense Acquisition Council (DAC) this week approved proposals worth Rs 790 billion, a move that the brokerage said underlines its belief in an increasing total addressable market (TAM) for domestic defense companies strengthened.

The new approvals, announced on October 23, cover acquisitions in the Navy, Army and Air Force, pushing the cumulative “acceptance of necessity” (AoN) approvals for FY26 to Rs 2.5 trillion, which is already higher than the Rs 2.3 trillion recorded in the entire previous fiscal year. Goldman expects more approvals for “strategic systems in the second half of FY26,” which will boost near-term visibility of India’s defense spending.

Goldman said current AoNs are heavily Navy-biased, including spending on landing platform docks (LPDs) for amphibious operations, 30mm surface guns for anti-piracy missions and advanced lightweight torpedoes for submarine warfare. The Army’s share will include Nag Mk-II missile systems and ground-based ELINT platforms, while the Air Force will acquire drone-based long-range strike systems.

While actual orders might come after two years, the brokerage said shipbuilders such as Mazgaon Dock Shipbuilders (MDSL) and Garden Reach Shipbuilders & Engineers (GRSE) will be the first to gain, given the Navy’s heavy pipeline. “GRSE completed the NSG trials on May 25 and will therefore likely benefit from their future order,” Goldman said.

Top Buys: PTC & Solar Industries

Among listed players, Goldman maintained a ‘Buy’ rating on PTC Industries and Solar Industries, with 12-month target prices of Rs 24,725 (46% upside) and Rs 18,215 (30% upside), respectively. The brokerage cited PTC’s growing global footprint in titanium and superalloy components and Solar’s “unique moat in high-energy materials.”

The brokerage also reiterated ‘buy’ calls on Bharat Electronics (BEL), Astra Microwave, Data Patterns and Azad Engineering, while remaining neutral on Hindustan Aeronautics (HAL). However, Bharat Dynamics (BDL) was rated ‘Sell’, with Goldman citing ‘shrinking margins and unattractive valuations’ despite a robust order pipeline. The target price for BDL was fixed at Rs 1,375, implying a decline of 11% from current levels.

BEL, Data Patterns and Astra in pictures

Goldman expects BEL to reap “trickle-down benefits” of Rs 120-150 billion from upcoming electronics and integration contracts, given its role as a major supplier of defense electronics. Data Patterns and Astra Microwave, it added, could see tailwinds from increased investments in electronic warfare and radar systems under India’s Technology Perspective and Capability Roadmap. Order momentum is likely to increase further, Goldman said, pointing to a steady increase in AoN values ​​since FY23 compared to the FY13-FY22 period. According to current procurement rules, orders usually follow within two years of an AoN. The brokerage concluded that as defense spending momentum increases, “the trickle-down benefits to the domestic defense ecosystem, particularly to private sector players, are likely to keep earnings momentum intact.”

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