Q2 FY26 Performance In The Defence Sector
The defence sector had definitely taken centre stage in the Q2 FY26 and it is not merely about the figures, but an account of execution and strategy coming true. Firms throughout the industry also showed positive growth in their revenue, owing to increased efforts in missile, avionics, and radar systems.
As a trader did you wonder how such rapid growth could happen? General revenue that Choice Broking covers shot up 21.8 and 40.9 per cent annually and quarter-on-quarter, respectively.
There was a slight squeeze in margins attributed to product mix, but an overall 10.5% YoY and 37.5% QoQ increase in EBITDA. This is not the only thing; net profits increased 16.6 percent YoY, and 33.5 percent QoQ, which points to a great improvement in both state-owned and privately owned defence competitors.
This is why, be it the case of HAL, BEL, or the smaller private markets, the trend is apparent, the defence industry is also on a solid growth pattern, with strategic implementation and operational efficiency.
Are you observing these numbers, investors?
Defence Sector Q2 FY26 Performance Overview
- Defence sector delivered strong performance in Q2 FY26, with healthy revenue growth across companies.
- Growth driven by accelerated execution in missile, avionics, and radar programs and broad-based profitability improvement.
- Overall revenue across defence companies under Choice Broking’s coverage rose 21.8% YoY and 40.9% QoQ.
- EBITDA grew 10.5% YoY and 37.5% QoQ, though margins contracted due to product mix.
- Net profit increased 16.6% YoY and 33.5% QoQ, signaling improvement across state-run and private defence players.
Performance Of PSU Defence Companies
| Category | Details |
|---|---|
| PSU Defence Companies Performance | Significant recovery in Q2 FY26 |
| Key Contributors | HAL, BEL, BDL |
| Execution & Profitability | Strong performance observed |
| Margin | Slight dip due to higher production intensity and inventory drawdown |
| Sector Insights | Highlights structural edge of PSUs in large defence programmes |
| Seasonality | H2 is typically stronger for order inflows |
Top Defence Stocks To Watch: Choice Broking’s Buy Picks for FY26
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Hindustan Aeronautics Limited (HAL) | Buy | Target: ₹5,570
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Poised for a stronger H2 FY26 with revenue growth from ongoing and new programs.
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Keep an eye on the Tejas Mk1A delivery schedule, key for investors.
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Valued at 35x FY27/28E EPS.
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Bharat Electronics (BEL) | Buy | Target: ₹500
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System integration and complex defence electronics to drive long-term growth.
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Upcoming Defence System Integration Complex (₹1,400 crore capex) to handle high-end programs like QRSAM, Project Kusha, and NGC.
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Valued at 40x FY27–28E average EPS.
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Bharat Dynamics (BDL) | Buy | Target: ₹1,965
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Strong orderbook (- 7x FY25 revenue) and incremental pipeline of ₹50,000–60,000 crore.
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Expected strong cash generation and profitability improvements through FY28E.
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Valued at 35x FY27–28E average EPS.
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Data Patterns (India) | Buy | Target: ₹3,300
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Revenue growth expected over 25% in FY26 with solid execution and system-level capability expansion.
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Margins likely to recover to 35–40% as H2 deliveries scale up.
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Valued at 45x FY27/28E average EPS.
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(With Input From Media Reports)
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