Defence Stocks to Buy: Jefferies Picks 4 Defence Stocks With Targets

India's defence sector is entering a stronger growth phase as rising defence spending, higher exports and greater use of locally made weapons create new opportunities for listed defence companies. Solar Industries, Astra Microwave, Hindustan Aeronautics and Bharat Electronics are among the preferred defence stocks identified by Jefferies.

Indian defence exports rose 63% year on year to ₹38,400 crore in FY26, exceeding the government's ₹30,000 crore target. Defence exports are expected to grow further as Indian made systems gain visibility in international markets.

Defence exports gain after Operation Sindoor

The operational use of BrahMos and Astra missiles, Akash air defence systems, Akashteer command systems and Pinaka rockets during Operation Sindoor has improved the global credibility of Indian defence platforms.

Demand is also expanding across Southeast Asia, the Middle East, Africa and Latin America. Firm orders for BrahMos, including contracts involving Vietnam and Indonesia, have added to India's growing defence export opportunity.

India defence sector has large domestic opportunity

Jefferies estimates India's domestic defence opportunity could exceed $60 billion over the next four years. Domestic defence capital spending is expected to grow at a 16% compound annual growth rate between FY26 and FY30.

India's indigenisation push is also expanding, with more than 500 platforms and systems and over 5,000 subsystems and line replaceable units identified for localisation. Around 75% of capital procurement is now earmarked for domestic sourcing.

Private defence companies are also gaining ground. Their revenue share among major listed defence companies increased from 9% in FY23 to 16% in FY26.

Solar Industries gets Jefferies Buy rating

Jefferies initiated coverage on Solar Industries with a Buy rating and a ₹28,160 price target. The brokerage expects the company's defence business to increase from 27% of sales in FY26 to 40% by FY30.

Solar's defence revenue is expected to grow at a 42% compound annual growth rate through FY30, supported by a ₹18,000 crore defence order book. This includes a ₹6,100 crore Pinaka order expected to be executed over 10 years.

Jefferies expects Solar's earnings to grow at 31% annually through FY30, with return on equity remaining above 29%.

Astra Microwave moves into higher value defence systems

Jefferies also initiated coverage on Astra Microwave with a Buy rating and a ₹2,055 target price.

The company is moving from supplying components and subsystems towards becoming a development and production partner for complete defence systems. Its programmes include the Uttam AESA radar for Tejas Mk1A aircraft, QRSAM missiles and Su 30 fighter upgrades.

Astra received a **₹2,200 crore production order from **HAL in July 2026 for antenna array units for the Uttam radar. The order increased its overall order book to around ₹4,300 crore.

HAL and BEL remain preferred defence stocks

Jefferies maintained its Buy rating on HAL with a ₹6,800 target price, implying around 39% upside. The brokerage expects HAL's earnings to grow at a 15% compound annual rate between FY26 and FY29.

Bharat Electronics also carries a Buy rating with a ₹490 target price, with earnings expected to grow at 17% annually during the same period.

Jefferies has a Hold rating on Bharat Dynamics, with a ₹1,280 target. While its ₹26,200 crore order book provides earnings visibility, the brokerage believes the current valuation leaves limited room for further upside.

Risks for defence stocks

The defence sector's growth outlook also comes with execution risks. Delays in order execution, slower ramp up of new products and weaker international demand could affect earnings expectations.

For Astra Microwave, slower indigenisation and technology changes remain risks. Investors will also track whether rising defence spending translates into sustained orders, production and exports for companies such as Solar Industries, Astra Microwave, HAL and BEL.