Top 5 Defence Stocks in India by Market Capitalisation to Watch in 2025

The defence sector is fast becoming one of the most exciting and high-potential spaces in the Indian economy. What was once a government-heavy, slow-moving industry is now drawing attention from policymakers, innovators, and investors alike.  

As global geopolitical tensions rise and India doubles down on self-reliance, the domestic defence ecosystem is going through a major transformation. Long known as one of the world’s largest arms importers, India is now stepping into the spotlight as a key manufacturer of military-grade equipment and defence technologies. 

This shift is opening up big investment opportunities in defence stocks, especially with the private sector playing a growing role and policy frameworks becoming more investor-friendly. So, which are the top defence stocks in India right now? Let’s dive in.  

Defence Industry Overview 

India is home to one of the world’s largest and most powerful armed forces, and the defence sector plays an important role in national security. The space is diverse, ranging from aircraft and naval vessels to missiles and electronic warfare systems. Since 2014, India has aggressively pushed for indigenous production under flagship initiatives such as Make in India and Atmanirbhar Bharat. These policies have led to a dramatic shift in manufacturing and export dynamics. 

Defence exports have reached ₹23,622 crore in FY25, registering a year-on-year growth of 12.04%. Defence Public Sector Undertakings (DPSUs) reported an impressive 42.85% rise in exports, contributing ₹8,389 crore, while the private sector accounted for ₹15,233 crore. Additionally, the total number of exporters increased by 17.4% during this fiscal year.

With ambitious targets of ₹50,000 crore in exports and ₹3 lakh crore in total defence production by 2029, the trajectory is clearly upward.

Government spending has kept pace with this ambition. From ₹2,53,346 crore in FY14, India’s defence budget has expanded to ₹6,21,940.85 crore in FY25. Even more impressive is that 75% of the defence modernisation budget is now reserved for Indian-made systems.

This trend has also encouraged the private sector to participate more actively in the defence ecosystem, making India’s defence stocks a high-conviction segment for investors looking at long-term growth.

Top Defence Stocks in India by Market Capitalisation  

Overview of the Top Defence Sector Stocks in India 

Let us understand each defence stock in detail. 

1. Hindustan Aeronautics Ltd (HAL) 

When we talk about the best defence stocks, Hindustan Aeronautics Limited deserves the spotlight. This aerospace giant is engaged in the manufacture of aircraft and helicopters, along with repair and maintenance services. What makes HAL truly special is its role as a core equipment supplier to all branches of the Indian Defence Services: the Indian Air Force, Indian Navy, Indian Army, and Indian Coast Guard.

HAL boasts one of the strongest order books in the Indian defence industry, standing at an impressive ₹1,89,300 crore as of April 2025. The company has secured significant contracts, including 156 LCH Prachand helicopters, 12 Sukhoi-30MKIs and 240 AL-31FP engines. The pipeline looks even more promising, with another ₹1 lakh crore worth of orders expected in the next one to two years.

To support these deliveries, HAL has outlined a capital expenditure plan of ₹14,000 – 15,000 crore over five years, aimed at enhancing production capacity for platforms like the LCA Mark-2 and GE-414 engines. Now, in FY25, the company posted revenue of ₹30,105 crore (up 7% year-on-year), with a strong 35% profit before tax margin and an operating profit margin of 27%.

HAL’s future plans align closely with India’s push for self-reliance. With upcoming expansion in cities like Nashik, Tumkur, and Bengaluru, the company is well-positioned to cater not just to domestic demand but also to export and civil aviation opportunities. 

But, it is important to know that HAL derives the majority of its revenues from the Indian defence sector. So, for the company’s growth, it is equally important that it receives a continuous flow of orders from the government. 

2. Bharat Electronics Ltd (BEL) 

BEL develops advanced electronic equipment, systems, and services for the Indian defence sector, including radar and fire control systems, weapon systems, communication systems, network-centric systems, and electronic warfare systems.

The company has a diversified product portfolio and plays a critical role in India’s defence infrastructure. Although it has a limited presence in civilian space, the company is focused on expanding its technological leadership in defence.

As of FY25, the company’s order book was worth ₹71,650 crore, showing 12% YoY growth. With an annual revenue of ₹23,024 crore, the order book represents more than 3x annual revenue, providing excellent execution visibility. For FY26, BEL is targeting new orders worth ₹27,000 crore, with an additional potential upside of ₹30,000 crore if it secures the Quick Reaction Surface-to-Air Missile (QRSAM) contract.

It is also targeting projects like the Next-Generation Corvettes and Project Kusha (an indigenous S-400) to become a full-fledged system integrator. In FY25, the company’s EBITDA margin expanded by 400 basis points to 29.4%, and net profit reached ₹5,288 crore.

BEL is aggressively investing in R&D, with planned outlays of ₹1,600 crore, alongside an annual capital expenditure of ₹1,000 crore to expand capacity. The company is exploring next-generation areas, including 6G, network-centric systems (C4I), and AI-powered drone warfare. 

3. Bharat Dynamics Ltd (BDL) 

BDL is a Government of India enterprise that produces guided missiles, torpedoes, underwater weapons, and other defence-related equipment. It plays a crucial role in India’s missile defence ecosystem and also offers life-cycle support for equipment already in service.

In FY25, BDL secured new orders worth ₹6,700 crore, increasing its total order backlog to ₹22,800 crore, approximately seven times its annual sales. This provides strong visibility for future revenues over the next three to four years. The company also recorded its highest-ever export turnover of ₹1,200 crore in FY25.

BDL posted a total income of ₹3,695.45 crore and a net profit of ₹549.64 crore in FY25. Although net profit declined marginally from the previous year, the company remains financially sound and is now focusing more on export markets. 

An export-focused division has been established to identify new international opportunities, especially following the government’s approval to export the Akash Weapon System to nine countries. These developments enhance BDL’s status among India’s defence stocks and make it a promising option for those searching for defence stocks to buy.

4. Garden Reach Shipbuilders & Engineers Ltd (GRSE)

GRSE is a defence shipbuilding company under the Ministry of Defence. It has a rich legacy of delivering warships to the Indian Navy and Coast Guard and is the first Indian shipyard to have exported warships. Its order book stood at ₹22,680 crore as of March 31, 2025, covering nine major projects, which include 40 vessels, such as the P-17 Alpha Frigates and Next-Generation Offshore Patrol Vessels.

The company is expanding its capacity from 20 to 24 ships concurrently, to reach 28 ships by the end of 2025. It has also signed a memorandum of understanding (MoU) with domestic and international firms, including recent deals with Sweden and Denmark for propulsion system collaborations. In May 2025, GRSE secured a ₹25,000 crore order from the Indian Navy, underscoring its strategic importance.

The company achieved FY25 revenue of ₹5,076 crore, crossing the ₹5,000 crore mark for the first time. Net profit increased by 48% to ₹527 crore, while operating profit doubled to ₹368 crore. It is also focusing on expanding into new geographic regions, like greenfield facilities outside Kolkata, to meet future defence demand and increase export orders. 

5. Zen Technologies Ltd

Zen Technologies Ltd designs and manufactures advanced combat training and anti-drone solutions. The company’s products are widely used by the Indian armed forces, paramilitary units, and state police departments. As India’s largest supplier of simulation training equipment and anti-drone systems, Zen Technologies is perfectly positioned for the technology-driven defence landscape.

As of March 2025, Zen had an order book of ₹691.94 crore, with an additional ₹800 crore inflow expected in the first half of FY26. It also received a key order for Integrated Air Defence Combat Simulators from the Ministry of Defence. For FY25, Zen reported revenue of ₹973.64 crore and net profit of ₹280.24 crore.

The company has also developed an indigenous anti-drone system (ADS) suite that can neutralise drones across all frequency bands, making it superior to many global competitors. The firm is also entering cutting-edge areas, such as autonomous defence robotics and unmanned aerial vehicle (UAV) propulsion.

With multiple new products, such as Hawkeye, Vastrain, and Barbarik, in trial phases and a robust innovation pipeline, Zen is quickly rising through the ranks of top defence stocks in India.

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Key Factors to Consider Before Investing in Defence Stocks 

Before you dive into defence stocks in India, understanding these crucial factors will help you make informed investment decisions:

Financial Performance and Stability

It is necessary to analyse the company’s financial health, revenue growth, profit margins, debt levels, and cash flow patterns. Defence sector stocks often have cyclical revenue patterns based on government contract cycles, so look for consistent performance over multiple years.

Government Contracts and Policies

Since defence stocks heavily depend on government spending and policy decisions, it is essential to stay updated on defence budgets, procurement policies, and geopolitical developments that could impact order flows.

Geopolitical Environment

Global tensions, border security concerns, and international relations have a significant impact on defence spending and export opportunities for top defence stocks.

Regulatory Compliance

Defence companies operate in a highly regulated environment. Ensure the companies you consider have strong compliance records and can navigate complex regulatory requirements.

Final Thoughts 

India’s defence sector has strong government backing, a growing export market, and increasing private sector involvement. Companies benefit from large order books, long-term contracts, and policy support. But this space also faces risks. These include delays in orders, dependency on the government, and global supply chain issues.

The sector holds long-term promise but can be affected by geopolitical shifts and policy changes. It is better to study company data, order flows, and news updates before making any investment choice.

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Disclaimer: Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Registration granted by SEBI, enlistment as a Research Analyst with the Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The securities are quoted as an example and not as a recommendation.

This is for informational purposes and should not be considered as recommendations. Kindly refer to  https://share.market/ for more details. PhonePe Wealth Broking Private Limited, Research Analyst with SEBI Regn No: INH000013387, BSE RA Enlistment Number: 5887.