Despite positive analyst commentary, defence sector stocks emerged as the best performers on Wednesday, with the Nifty India Defence closing over 5% higher. According to latest reports, Garden Reach Shipbuilders & Engineers and Cochin Shipyard outperformed significantly, with shares ending nearly 20% and over 12% higher respectively. Bharat Electronics was the top gainer among Nifty 50 defence stocks, ending 4.5% higher after receiving new orders worth ₹67.95 billion. The contrasting performance came despite strong buy recommendations from global brokerages for BEL and nuanced views for HAL, highlighting the volatile nature of defence sector stocks that benefited from broader market optimism.
Goldman Sachs maintains a 'Buy' call on Bharat Electronics with a target price of ₹475, up from the earlier ₹470. As reported by ET Now, the brokerage noted that FY26 revenue grew 16.4% YoY to ₹267.5 billion, broadly in line with expectations. Q4FY26 is expected to see revenue growth of 12.7% YoY and EPS growth of 13.3% YoY. FY27 and FY28 EPS estimates have been raised by 1% each on potential margin upside from contract mix, with the overall outlook remaining strong supported by healthy execution and order visibility.
Morgan Stanley has maintained its Overweight rating on Bharat Electronics with a target price of ₹508. According to ET Now, the brokerage highlighted that BEL recorded order inflows of ₹300 billion in FY26, compared to its guidance of ₹270 billion. In Q4, BEL saw inflows of ₹108 billion, reflecting 11% year-on-year growth. The company's order book stood at ₹2.54 trillion, up from ₹1.89 trillion year-on-year, with strong execution visibility continuing. Morgan Stanley noted a strong pipeline across radars, avionics, and communication systems.
Goldman Sachs maintains a 'Neutral' stance on Hindustan Aeronautics with a target price of ₹5,255. As reported by ET Now, FY26 revenue grew 4.1% YoY to ₹322.5 billion despite supply chain challenges. Q4FY26 revenue is expected to decline 4.4% YoY due to delays in key platforms like LCA Mk1A and HTT-40. Margins are supported by other income, leading to a 3.4% EPS upgrade for FY26. While execution challenges persist, the order pipeline and long-term outlook remain intact.
The defence sector's strong performance was part of a broader market rally driven by hopes of de-escalation in the US-Iran conflict, with US President Donald Trump suggesting military forces may leave Iran in 'two or three weeks'. According to latest reports, the Nifty 50 closed 1.6% higher at 22,679.40 points while the BSE Sensex ended 1.7% higher at 73,134.32 points. India VIX, the fear gauge, ended lower at 25.0875, indicating improved investor sentiment after two consecutive sessions of nervousness. Broader markets outperformed with the Nifty SmallCap 100 up over 4% and all midcap indices over 3% higher, as the market's fear gauge had gained over 13% in the previous two sessions.
