The Indian government has implemented comprehensive policy reforms to transform the country's aircraft maintenance, repair and overhaul (MRO) industry. GST on MRO services has been reduced from 18% to 5%, while IGST on imported aircraft components and engine parts has been cut to 5%. The government has also extended customs duty exemption on MRO parts and tools until March 31, 2028, and introduced a moratorium and rent-free period for new hangar construction under the MRO Guidelines 2026. These measures address India's long-standing challenge of maintaining a large and growing aircraft fleet with insufficient domestic capacity. Safran's ₹1,300 crore investment in an engine MRO facility in Hyderabad serves as an early indicator of capacity building in response to these opportunities.
India's next phase of growth could be driven by a broader set of industries than the traditional large-cap leaders, according to Rajesh Kothari, Founder and Managing Director at AlfAccurate Advisors. In an interaction with ETMarkets, Kothari explains that several sectors are emerging as potential beneficiaries of manufacturing, supply-chain and structural shifts. The investment opportunity in India is expanding at the sector and company level, with focus remaining on businesses with sustainable growth, strong fundamentals and valuations that make investment sense. The aerospace sector specifically represents a significant growth opportunity as India's aircraft maintenance work, previously sent abroad to Singapore, the Gulf and Sri Lanka, begins returning home.
Hindustan Aeronautics (HAL) maintains one of India's largest MRO businesses, with its Repair, Overhaul and Maintenance segment contributing approximately ₹20,000 crore annually, representing about one-third of the company's total revenue. In Q1FY27, revenue rose 14.4% to ₹5,515 crore and net profit increased 14.9% to ₹1,590 crore, with the company maintaining a record order book of ₹2,54,538 crore. Bharat Electronics Ltd (BEL) offers lifecycle support exposure through Project HAMMER, a 50:50 joint venture with Safran Electronics & Defence, and BEL IAI Aerosystems joint venture with Israel Aerospace Industries. BEL's Q1FY27 showed strong performance with revenue rising 25.3% to ₹5,533 crore and profit increasing 8.2% to ₹1,048 crore, though EBITDA margin contracted to 25.11% from 28% due to higher material costs.
Aequs operates as a vertically integrated aerospace component manufacturer from a dedicated SEZ in Belagavi, being the first Indian company to assemble plug doors and over-wing exit doors for both Airbus and Boeing. The company's Q1FY27 performance showed consolidated revenue rising 55% year-on-year to ₹396 crore, with its aerospace order book crossing $1 billion for the first time. However, the company reported a net loss of ₹53.2 crore due to higher depreciation and finance costs from capacity expansion. Taneja Aerospace and Aviation operates from Hosur with a hangar capable of accommodating Boeing 737 and Airbus A320-class aircraft, providing the most direct physical exposure to civil MRO services among the four companies.
Kothari's investment philosophy emphasizes 'Protect Capital, Create Wealth' approach, with risk management central to portfolio management. According to ETMarkets, all AlfAccurate funds have outperformed their respective benchmarks across 1, 2, 3 and 5-year periods. The AAA Budding Beasts mid- and small-cap PMS has delivered over 22% CAGR returns over both 3 and 5 years, demonstrating consistency across market cycles. The India Equity Fund shows estimated FY26 EPS growth of 27.9% versus 8% for the BSE 500, though it trades at a higher P/E multiple. Despite the policy reforms creating a larger domestic MRO market, the listed investment universe remains complex as none of these four companies is a pure-play MRO stock, requiring investors to evaluate established defence maintenance companies, aerospace supply chain builders, and direct MRO exposure providers.
