Private defence companies could outperform public sector undertakings (PSUs) in Q2 FY27, with select players expected to benefit from stronger execution, higher realisations and company-specific growth drivers. ICICI Securities remains constructive on Hindustan Aeronautics (HAL), Bharat Electronics (BEL) and Azad Engineering.
The Indian defence sector is likely to deliver mixed performance in the September quarter, with private-sector players expected to outpace their public-sector counterparts. While first-half execution has historically been weak, select private companies could report stronger-than-expected growth, partly supported by order execution spilling over from the June quarter.
According to ICICI Securities’ Q2 FY27 preview, most private defence companies are expected to post higher double-digit revenue growth, while PSU defence companies could report growth ranging from flat to the lower double digits. PSU margins may remain steady or contract amid changes in product mix and input cost pressures.
Excluding outliers in its defence coverage, the brokerage expects average revenue growth of around 13% year-on-year in Q2 FY27. Zen Technologies, Solar Industries India and Azad Engineering are likely to stand out, with projected revenue growth of 55%, 52% and 30%, respectively.
Zen Technologies is expected to report strong execution, with revenue projected to rise 55% year-on-year and 90% sequentially in the September quarter. Solar Industries India could benefit from higher realisations in its international and defence businesses, supporting an estimated 52% revenue growth.