Brokerage DAM Capital has identified Hindustan Aeronautics (HAL), Mishra Dhatu Nigam (MIDHANI) and Bharat Dynamics (BDL) as its preferred picks among defence public sector undertakings (DPSUs), according to its April 2026 initiation report. The brokerage expects India's defence and aerospace sector to enter a new phase of growth, driven by rising domestic procurement, localisation, defence electronics, drones and global aerospace partnerships. DAM Capital noted that the sector is moving beyond an order-driven expansion phase towards growth led by technology, capabilities and manufacturing capacity. As per the latest reports, the targets reflect significant upside potential with HAL targeting ₹6,300 (27.9% upside from ₹4,925 current price), BDL at ₹1,540 (36.9% upside from ₹1,125 current price), and MIDHANI at ₹430 (currently at ₹432.70, showing -0.6% upside).
For Bharat Dynamics, DAM Capital listed a target price of ₹1,540, indicating an upside potential of 36.9% from the current price of ₹1,125. The company had an order book of approximately ₹261.8 billion at the end of FY26, providing four to five years of execution visibility. DAM Capital highlighted BDL's efforts to improve execution after technical issues and supplier-quality problems affected deliveries in FY26. The brokerage noted that BDL is entering a strong execution phase, with FY27 revenue targeted at ~ ₹55bn and a longer-term goal of ₹100bn by FY30, supported by a robust order book providing 4–5 years of visibility. Recent reports suggest the company faces near-term challenges with Q2 FY27 expectations showing revenue down about 2% and profit down about 17% on a high base, despite improving Akash execution.
For Hindustan Aeronautics, DAM Capital listed a target price of ₹6,300, indicating an upside potential of 27.9% from the current price of ₹4,925. The company's Tejas Mk1A programme is approaching the final stages before induction, although radar and missile integration issues and final regulatory clearance remain important milestones. According to the report, HAL had 27 Tejas Mk1A airframes ready, with 10 GE F404 engines received and four more in transit at the time of assessment. Beyond Tejas, HAL's growth opportunities include the HTT-40 trainer, Dhruv NG helicopters, the CATS Warrior programme and the proposed LCA LIFT trainer. For Q2 FY27, DAM Capital expects revenue to increase about 6% on a higher base with further Tejas Mk1A delivery delays, positioning HAL as a preferred pick despite near-term execution challenges.
For Mishra Dhatu Nigam, DAM Capital listed a target price of ₹430, implying an over 8% potential upside from the current price of ₹432.70. The company is positioned to benefit from rising demand for titanium alloys, superalloys and specialised steels used in fighter aircraft, aero-engines, space and naval platforms. DAM Capital noted that MIDHANI is well positioned for sustained growth, supported by its strong competitive moat in strategic materials, expanding aerospace and defence applications and rising import-substitution opportunities. The company's integrated capabilities across superalloys, titanium alloys and special steels create high entry barriers. However, recent reports indicate that MIDHANI is already trading above its ₹430 April target, suggesting the target may have been raised, though specific confirmation is not available.
DAM Capital sees defence electronics as a structural growth opportunity, with the market expected to grow at over 15% CAGR over the medium term, driven by domestic production, import substitution and exports. The brokerage favours Astra Microwave Products and Zen Technologies, given their exposure to radar, electronic warfare, counter-drone and simulation technologies. Drones are another growth driver, with a proposed ₹200 billion Fast Track Procurement programme covering unmanned aerial vehicles, loitering munitions and surveillance systems, with deliveries expected to begin over the next 18–24 months. DAM Capital estimates that proposed programmes, including 114 Rafale fighters, six P-75(I) submarines, eight Next Generation Corvettes and QRSAM, represent a potential ₹5 trillion order opportunity. The sector has been one of the most watched themes of 2026, supported by large approvals from the Defence Acquisition Council and a push for local manufacturing, with geopolitical tensions treated as a tailwind for continued growth.
