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The Defence Acquisition Council (DAC) has recently approved eight proposals amounting to over Rs 54,000 crore, setting the stage for significant advancements in India's defence capabilities and creating lucrative opportunities for companies like Bajaj Electricals Ltd (BEL), Bharat Dynamics Ltd (BDL), and Astra Microwave Ltd. These proposals encompass critical upgrades and procurements, including enhancements to T-90 tank engines and the acquisition of Varunastra Torpedoes. The move signifies a concerted effort to bolster the Indian armed forces and promote self-reliance in defence production. One of the key highlights of the DAC's decision is the approval for enhancing the T-90 tank engine's power from 1,000 horsepower to 1,350 horsepower. This upgrade is crucial for improving the operational effectiveness of the T-90 tanks, which form a vital component of the Indian Army's arsenal. The increased power will enhance the tanks' mobility, speed, and overall performance in diverse terrains and combat scenarios. Furthermore, the DAC has given the green light for the procurement of Varunastra Torpedoes, an indigenously-developed ship-launched anti-submarine torpedo developed by Naval Science & Technological Laboratory and manufactured by BDL. The acquisition of these torpedoes will significantly strengthen the Indian Navy's anti-submarine warfare capabilities, providing a formidable deterrent against underwater threats. The DAC's approval also extends to the procurement of Airborne Early Warning and Control (AEW&C) Aircraft Systems. These systems are essential for providing comprehensive aerial surveillance, detecting enemy aircraft, and coordinating air defence operations. The acquisition of AEW&C Aircraft Systems is expected to benefit several companies, including Bharat Electronics Limited (BEL) and Astra Microwave, which specialize in radar systems and other critical components. ICICI Securities anticipates a positive outlook for the defence sector, stating that FY26 is likely to be a promising year due to the gathering momentum of AoNs (Acceptance of Necessity) and orders, along with a more efficient capital acquisition process. The brokerage firm has identified Solar Industries, PTC Industries, and Azad Engineering as its top picks in the sector, with respective target prices of Rs 13,720, Rs 20,070, and Rs 2,350. Additionally, ICICI Securities has issued 'Buy' ratings for BDL (target price: Rs 1,400), BEL (target price: Rs 350), and Astra Microwave (target price: Rs 935), indicating confidence in the growth potential of these companies. The DAC's endorsement of reforms in the capital acquisition process is another significant development. These reforms aim to streamline and optimize defence procurement procedures, expedite project approvals, and enhance transparency and efficiency. The implementation of these reforms is expected to have a positive impact on the defence sector, leading to faster project execution and reduced bureaucratic delays. Market analysts foresee a substantial boost to the defence sector, driven by the anticipated increase in orders and AoNs. The potential implementation of capital acquisition process reforms could pave the way for a significantly improved financial year 2026 for the defence industry. This optimism is fueled by the Indian government's commitment to modernizing its armed forces and promoting self-reliance in defence production. The share of domestic procurement has already risen from 54 per cent to 75 per cent, and further improvements are expected in the coming years. Antique Stock Broking has highlighted the tremendous opportunities for Indian defence manufacturers, including PTC Industries Ltd, Mazagon Dock Shipbuilders, Hindustan Aeronautics Ltd (HAL), BEL, and BDL. The brokerage firm maintains 'Buy' ratings on PTC Industries (target price: Rs 19,639), HAL (target price: Rs 4,887), Mazagon Dock Shipbuilders (target price: Rs 2,757), BEL (target price: Rs 376), and BDL (target price: Rs 1,351), underscoring the growth potential of these companies.
The DAC's recent decisions underscore the Indian government's unwavering commitment to strengthening its defence infrastructure and capabilities. This commitment is reflected in the focus on enhancing technological capabilities, modernizing defence assets, and promoting self-reliance in defence production. The government's efforts to create a conducive environment for domestic defence manufacturers are evident in the reforms to the capital acquisition process and the emphasis on increasing the share of domestic procurement. The reforms in the capital acquisition process are particularly important as they aim to address the long-standing challenges of bureaucratic delays and inefficient procurement procedures. By streamlining the process, the government hopes to expedite project approvals, reduce costs, and enhance transparency. The increased focus on domestic procurement is also aimed at promoting the growth of the Indian defence industry, creating jobs, and reducing the country's dependence on foreign suppliers. The government's long-term goal is to achieve self-reliance in defence production, which would not only strengthen the country's national security but also boost its economy. The recent DAC approvals and the ongoing reforms in the defence sector are expected to have a positive impact on the Indian economy. The increased investment in defence procurement will create opportunities for domestic manufacturers, generate employment, and stimulate technological innovation. The reforms in the capital acquisition process will also help to reduce costs and improve efficiency, making the defence sector more competitive. The Indian government is also actively promoting defence exports, which could further boost the growth of the sector. The government has set a target of achieving $5 billion in defence exports by 2025. To achieve this target, the government is providing incentives to domestic manufacturers and working to improve the competitiveness of the Indian defence industry. The Indian defence sector is poised for significant growth in the coming years, driven by the government's commitment to modernizing its armed forces, promoting self-reliance in defence production, and increasing defence exports. The recent DAC approvals and the ongoing reforms in the defence sector are expected to create numerous opportunities for domestic manufacturers and contribute to the overall growth of the Indian economy. The challenge, however, remains to ensure that these reforms are implemented effectively and that the Indian defence industry is able to compete with its global counterparts. This requires a concerted effort from the government, industry, and academia to foster innovation, improve quality, and reduce costs. The government must also ensure that the procurement process is transparent and efficient, and that domestic manufacturers are given a level playing field. The Indian defence industry has the potential to become a major player in the global market, but it needs the right policies and support to realize its full potential.
As the industry anticipates the implementation of the newly approved reforms, there is an expectation of increased momentum in defence procurement and sustainable growth prospects for the sector in the coming years. The increased investment in defence procurement is expected to benefit a wide range of companies, from large conglomerates to small and medium-sized enterprises (SMEs). This will create opportunities for job creation and economic growth across the country. However, the success of these initiatives will depend on the ability of the Indian defence industry to adapt to the changing landscape and meet the demands of the armed forces. This requires a commitment to innovation, quality, and efficiency. The government also has a role to play in supporting the industry by providing access to funding, technology, and skilled labor. The Indian defence industry is facing a number of challenges, including a shortage of skilled labor, a lack of access to funding, and a complex regulatory environment. The government is working to address these challenges, but more needs to be done to create a level playing field for domestic manufacturers. The government should also consider providing incentives for companies to invest in research and development, which would help to foster innovation and improve the competitiveness of the Indian defence industry. The Indian defence industry has the potential to become a major engine of economic growth and job creation. By implementing the right policies and providing the necessary support, the government can help the industry to achieve its full potential. Furthermore, the strategic implications of these developments extend beyond economic considerations. A strong and self-reliant defence industry enhances India's national security and its ability to project power in the region. By reducing its dependence on foreign suppliers, India can safeguard its strategic interests and avoid being held hostage to geopolitical pressures. The development of indigenous defence capabilities also fosters technological innovation and creates a skilled workforce, which can have spillover effects on other sectors of the economy. The government's commitment to promoting self-reliance in defence production is therefore not only a matter of economic policy but also a crucial aspect of national security strategy. In conclusion, the recent DAC approvals and the ongoing reforms in the defence sector represent a significant step forward in India's efforts to modernize its armed forces, promote self-reliance in defence production, and strengthen its national security. While challenges remain, the opportunities for growth and development are immense. By working together, the government, industry, and academia can create a vibrant and competitive defence industry that contributes to the economic prosperity and national security of India. The sustained focus on indigenous development and efficient procurement processes will be crucial in realizing this vision and establishing India as a major player in the global defence landscape.
Source: BEL, BDL, Astra Microwave shares to benefit from Rs 54K cr orders; target prices