India's defence manufacturing sector achieved remarkable milestones in FY26, with annual defence production rising 15.6% to a record ₹1.78 lakh crore. According to the Ministry of Defence, this represents a 110% increase from ₹84,643 crore recorded in FY21. Defence exports also reached unprecedented levels, reaching ₹38,424 crore in FY26, an increase of 62.7% from ₹23,622 crore in FY25. The private sector's contribution to defence production increased from 22% to 24%, as reported by the Press Information Bureau. Recent market developments show mergers and acquisitions in the UK defence sector hit a record high in the first half of 2026, with private equity investors increasingly outbidding trade buyers as demand for military technology businesses accelerates.
The defence and national security market is experiencing a fundamental repricing with valuations increasing as investors position themselves ahead of increased government spending. According to Heligan Group analysis, defence valuations continue to rise as investors focus on supply chain resilience and dual use capabilities - no longer seen as buzzwords but primary evaluation criteria for Ministry of Defence procurement. In H1 2026, acquirers are paying strategic multiples for acquisitions that can help with supply chain resilience, with the Defence Investment Plan (DIP) release expected to drive further M&A activity. This represents a significant shift from previous valuation cycles, with capital following capital as the sector enters a new growth phase.
Hindustan Aeronautics reported consolidated revenue of ₹33,089 crore in FY26, representing 6.8% year-on-year growth, with net profit rising 9% to ₹9,116 crore. The company maintains a substantial order book of ₹2,54,538 crore with fresh orders of ₹97,028 crore during the year, including an order for 97 Tejas Mark-1A aircraft. However, execution bottlenecks remain the primary concern, with aircraft deliveries delayed due to engine availability issues from GE, with deliveries expected to begin by August-September 2026. The company plans ₹12,000 crore investment by 2030 to support Tejas Mark-2 and other programmes.
Garden Reach Shipbuilders demonstrated robust performance with revenue growth of 38% to ₹7,002 crore and net profit growth of 42% to ₹748 crore in FY26. The company delivered eight warships to the Indian Navy and seven naval surface guns, with export revenue crossing ₹270 crore. Its order book stands at ₹15,324 crore covering 39 platforms, though the backlog fell below ₹20,000 crore for the first time in five years due to faster execution. The company is positioned as the lowest bidder for the ₹33,000 crore Next Generation Corvette project, with revenue recognition expected from the second half of FY28.
Mishra Dhatu Nigam achieved its highest-ever revenue of ₹1,208.63 crore in FY26, representing 12.5% growth, with net profit rising 18.8% to ₹130.79 crore. The company's titanium production almost doubled to 700 tonnes, with titanium orders worth over ₹660 crore at the time of earnings call. However, the company's EV/EBITDA multiple of 28.7x remains above its five-year median of 26x, reflecting concerns about raw material availability and dependence on imports of nickel, cobalt, and titanium sponge. The company plans ₹1,000 crore investment over three years to expand capacity and improve returns.
