BEL, Solar Industries, PTC to see upside up to 46%, Goldman Sachs says amid Rs 790 billion defence push

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

The new approvals, announced on October 23, cover acquisitions across the Navy, Army, and Air Force, pushing cumulative “acceptance of necessity” (AoN) clearances for FY26 to Rs 2.5 trillion, already exceeding the Rs 2.3 trillion recorded in the entire previous fiscal year. Goldman expects more approvals for “strategic systems in H2FY26,” strengthening near-term visibility for India’s defense spending.

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

While actual orders could materialize only after two years, the brokerage said shipbuilders such as Mazgaon Dock Shipbuilders (MDSL) and Garden Reach Shipbuilders & Engineers (GRSE) stand to gain first, given the Navy-heavy pipeline. “GRSE has completed NSG trials in May-25 and hence is likely to gain from the future order of the same,” Goldman said.

Top buys: PTC & Solar Industries

Among listed players, Goldman maintained ‘Buy’ ratings 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 energetic materials.”

The brokerage also reiterated ‘Buy’ calls on Bharat Electronics (BEL), Astra Microwave, Data Patterns, and Azad Engineering, while staying Neutral on Hindustan Aeronautics (HAL). Bharat Dynamics (BDL), however, was rated ‘Sell’, with Goldman flagging “contracting margins and unattractive valuations” despite a robust order pipeline. The target price for BDL was set at Rs 1,375, implying an 11% downside from current levels.

BEL, Data Patterns, and Astra in focus

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

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