Synopsis: Several defence stocks are in focus for FY26, backed by strong order books, robust revenue growth guidance, and strategic expansion in domestic defence production, modernisation initiatives, and high-value aerospace and electronics segments.
Defence stocks have come into focus as investors closely monitor companies with strong growth prospects and robust order books. With rising government spending on domestic defence production and increasing emphasis on modernisation, these stocks are attracting attention for their potential to deliver consistent revenue and earnings growth in FY26. Market participants are keeping a close watch on sectoral trends, policy initiatives, and technological advancements that could shape performance across the defence industry.
Premier Explosives Limited
Premier Explosives Limited, founded in 1980 and headquartered in Secunderabad, India, is a manufacturer and seller of high-energy materials and related products for both domestic and international markets. The company produces a wide range of products including bulk and packaged explosives, detonators, fuses, solid propellants, pyrotechnic devices, warheads, ammunition, rocket motors, smoke markers, and tear gas.
With a market capitalization of Rs. 2,426.24 crores, Premier Explosives Limited, closed at Rs. 450.95 per equity share, down by 4.96 percent from its previous day’s close price of Rs. 474.50 per equity share.
Revenue for Q3FY26 stood at Rs. 81.41 crore, down 50.9 percent YoY from Rs. 165.92 crore in Q3FY25, but up 7.7 percent QoQ compared to Rs. 75.58 crore in Q2FY26, indicating a modest sequential recovery after a steep annual decline. Net profit came in at Rs. 6.04 crore, declining 34.3 percent YoY from Rs. 9.19 crore and 66.2 percent QoQ from Rs. 17.87 crore, reflecting pressure on profitability despite a slight quarter-on-quarter revenue improvement.
Order Book
The company reported an order book of Rs. 1,294.6 crore, equivalent to 3.1x FY25 revenue and covering roughly two years of business. The composition is heavily skewed toward defense orders at Rs. 1,191 crore (92 percent), with explosives and O&M/services contributing Rs. 51.8 crore each (4 percent). This robust order book signals strong near-term revenue visibility and a steady project pipeline, particularly in the defense segment.
Revenue Guidance
For FY26, the company reaffirmed its revenue guidance of Rs. 500–550 crore, representing 32 percent growth over FY25 revenue of Rs. 417 crore, though actual achievement remains dependent on inspections. The FY27 outlook is intentionally conservative, with management opting for a cautious approach despite investor expectations of Rs. 700–800 crore, reflecting prudence in forecasting while maintaining disciplined growth assumptions.
Azad Engineering Ltd
Azad Engineering Limited, incorporated in 1983 and headquartered in Hyderabad, India, manufactures and sells precision-engineered components for domestic and international markets. Its products serve aerospace, defense, energy, and oil & gas sectors, and include airfoils/blades for aircraft engines and turbines, actuator systems, hydraulic and flight control components, combustion and propulsion parts, and nuclear and thermal power turbine components.
With a market capitalization of Rs. 9,635.60 crores, Azad Engineering Limited, closed at Rs. 1,492.70 per equity share, down by 5.82 percent from its previous day’s close price of Rs. 1,584.90 per equity share.
Revenue for Q3FY26 stood at Rs. 156 crore, marking a 31.1 percent year-on-year increase from Rs. 119 crore in Q3FY25, and a 9.1 percent quarter-on-quarter rise compared to Rs. 143 crore in Q2FY26, indicating strong sequential and annual growth. Net profit came in at Rs. 34 crore, up 41.7 percent YoY from Rs. 24 crore and 3 percent QoQ from Rs. 33 crore, reflecting steady improvement in profitability alongside robust revenue gains.
Order Book
The company reported an order book exceeding Rs. 6,500 crore, providing multi-year revenue visibility and showing consistent growth quarter after quarter since listing. Revenue is primarily driven by the Energy and Oil & Gas segments, while the Aerospace & Defence share is steadily increasing, serving as a key medium-term diversification driver.
Revenue Guidance
Management reaffirmed confidence in achieving 25 percent+ revenue growth over the coming years, contingent on plant readiness, secured order book, and visible demand. Despite recent delivery growth exceeding 30 percent, the CEO adopted a cautious growth posture for FY26, citing execution and qualification risks, with plans to reassess growth guidance toward maximum utilization by FY28.
MTAR Technologies Ltd
MTAR Technologies Limited is an Indian engineering company that manufactures high-precision, heavy equipment, components, and machines for domestic and international markets. It provides space solutions including liquid propulsion and cryogenic engines with associated components, as well as mechanical subsystems and systems integration for defence and aerospace sectors.
With a market capitalization of Rs. 10,412.12 crores, MTAR Technologies Limited closed at Rs. 3,388 per equity share, down by 3.59 percent from its previous day’s close price of Rs. 3,514 per equity share.
Revenue for Q3FY26 stood at Rs. 278 crore, up 59.8 percent YoY from Rs. 174 crore in Q3FY25 and 104.4 percent QoQ compared to Rs. 136 crore in Q2FY26, reflecting strong sequential and annual growth. Net profit rose to Rs. 35 crore, marking a 118.8 percent YoY increase from Rs. 16 crore and a 600 percent QoQ jump from Rs. 5 crore, highlighting significant improvement in profitability alongside robust revenue gains.
Order Book
The company reported a Q3FY26 order book of Rs. 2,394.9 crore with an unprecedented Q3 inflow of Rs. 1,370 crore, broad-based across sectors. Management targets a FY26 exit order book of Rs. 2,800 crore, implying Q4 inflows of Rs. 700–800 crore driven by fuel cell, nuclear, and aerospace/space orders, signaling strong near-term revenue visibility.
Revenue Guidance
For FY26, the company maintains revenue growth guidance of 30–35 percent, expecting to cross Rs. 900 crore, while FY27 revenue is targeted at ~50 percent growth, reflecting management confidence in scaling operations and executing secured orders.
EBITDA Guidance
FY26 EBITDA margin guidance is reaffirmed at ~21 percent ±1 percent, while for FY27, management expects substantially higher margins due to operating leverage and a favorable shift toward higher-volume, higher-margin production mix.
Zen Technologies Limited
Zen Technologies Limited is an Indian company that designs, develops, manufactures, and sells training simulators for defence, security, and civilian applications. Its offerings include anti-drone systems, live-firing and indoor tactical training simulators, weapon and gunnery training systems, driving simulators, and aptitude testing solutions. The company serves police, paramilitary, armed forces, government departments, and civilian markets. Incorporated in 1993, Zen Technologies is headquartered in Hyderabad, India.
With a market capitalization of Rs. 12,324.63 crores, Zen Technologies Limited closed at Rs. 1,364.70 per equity share, down by 3.80 percent from its previous day’s close price of Rs. 1,418.60 per equity share.
Revenue for Q3FY26 stood at Rs. 178 crore, up 17.1 percent YoY from Rs. 152 crore in Q3FY25 and 2.3 percent QoQ compared to Rs. 174 crore in Q2FY26, reflecting steady growth. Net profit came in at Rs. 56 crore, marking a 30.2 percent YoY increase from Rs. 43 crore but a 9.7 percent sequential decline from Rs. 62 crore in Q2FY26, indicating strong annual profitability tempered by a slight quarter-on-quarter dip.
Order Book
The company’s order book grew from Rs. 1,082 crore on 31-Dec-2025 to Rs. 1,427 crore on 31-Jan-2026, supported by Rs. 931 crore of orders received over the past four months. The composition includes Rs. 338 crore in AMC contracts, with the equipment portion (~Rs. 1,100 crore) expected to be executed over ~18 months. Product-wise, orders are evenly split between anti-drone systems and simulators, with a 93 percent domestic and 7 percent export mix.
Revenue Guidance
Management revised its FY26–FY28 revenue aspiration from Rs. 6,000 crore to ~Rs. 4,000 crore over two years due to procurement delays, framing FY26 as a muted year, potentially 20–25 percent lower than FY27, which is expected to be the highest turnover in company history. Exports are being strategically expanded, targeting 20–30 percent of revenues by FY28, supported by EU trade agreements, while the US market remains a high-potential but compliance-driven opportunity.
Apollo Micro Systems Limited
Apollo Micro Systems Limited is an Indian technology company that designs, develops, and assembles electronic and electromechanical solutions. Its offerings include missile and avionics simulators, DSP and signal processing systems, integrated avionics modules, satellite data simulators, and payload checkout systems.
With a market capitalization of Rs. 7,213.73 crores, Apollo Micro Systems Limited closed at Rs. 200.67 per equity share, down by 4.82 percent from its previous day’s close price of Rs. 210.84 per equity share.
Revenue for Q3FY26 stood at Rs. 252 crore, up 70.3 percent YoY from Rs. 148 crore in Q3FY25 and 12 percent QoQ compared to Rs. 225 crore in Q2FY26, reflecting strong sequential and annual growth. Net profit came in at Rs. 23 crore, marking a 27.8 percent YoY increase from Rs. 18 crore but a 23.3 percent sequential decline from Rs. 30 crore in Q2FY26, indicating healthy annual profitability tempered by a quarter-on-quarter drop.
Revenue Guidance
The company reaffirmed a 3-year revenue growth target of 45–50 percent CAGR from its core defense electronics business, explicitly excluding contributions from recent or future acquisitions. Management highlighted a strategic transition from subsystem and system manufacturing to full-fledged weapon system production, signaling a clear focus on higher-value defense offerings.
Order Book
As of 31-Dec-2025, the consolidated order book stood at Rs. 1,305 crore, split between ~Rs. 800 crore in core/standalone business and ~Rs. 500 crore in IDL Explosives. Management indicated that the mine order is expected at Rs. 2,500 crore, with additional orders anticipated in collaboration with BDL, reinforcing strong medium-term revenue visibility.
Krishna Defence And Allied Industries Limited
Krishna Defence and Allied Industries Limited, based in Mumbai, India, manufactures equipment for defence, security, dairy, and kitchen sectors. It operates through Defence Products and Dairy & Kitchen Equipment, offering shipbuilding steel sections, armored vehicle components, security devices, bulk milk coolers, milking machines, parlors, and cooking and storage equipment. Founded in 1996, it was formerly Krishna Allied Industries Limited.
With a market capitalization of Rs. 1,493.07 crores, Krishna Defence And Allied Industries Limited closed at Rs. 994 per equity share, down by 7.75 percent from its previous day’s close price of Rs. 1,077.50 per equity share.
In Q3FY26, Krishna Defence and Allied Industries Limited reported revenue of Rs. 64 crore, up 23.1 percent YoY from Rs. 52 crore in Q3FY25 and 33.3 percent QoQ from Rs. 48 crore in Q2FY26, reflecting strong order execution and growth across its defence and industrial equipment segments. Net profit rose sharply to Rs. 10 crore, up 150 percent YoY from Rs. 4 crore, and 11.1 percent QoQ from Rs. 9 crore in Q2FY26.
Strong Order Book
As of December 31, 2026, the company’s order book stands at Rs. 142.3 crore, indicating a stable and robust business pipeline, which ensures continued revenue visibility and margin sustainability.
Future Guidance
Krishna Defence & Allied Industries Limited aims to achieve 30 percent+ CAGR over the next 3 to 5 years. The company is focusing on developing new defence products to replace imports by collaborating with defence research agencies and foreign partners.
It plans to establish a new manufacturing facility for composite doors and hatches in collaboration with VABO by FY26 to enhance production capabilities and meet growing defence sector demand. Additionally, the company is investing in a dedicated defence electronics unit for designing, developing, and manufacturing solutions for the Defence and Aerospace sectors.
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