BEL, BDL, GRSE, Mazagon Dock, Cochin, Data Patterns Share Volatile: Which Defence Stocks To Buy-On-Dips?

Defence stocks continued to trade on a volatile note on February 25, however, largecap defence PSU stocks recovered past two days losses. Hindustan Aeronautics (HAL) surged by nearly 1% after falling for two consecutive days. Meanwhile, Bharat Electronics (BEL) and Bharat Dynamics (BDL) also recovered some losses but traded on a volatile range. Defence stocks emerge in focus amidst global geopolitical risks where demand for military equipment are high.

The sector witnessed a steady performance in Q3 of FY26, with defence PSU giants anchoring sector profitability alongside stable execution of pipeline and margin discipline, as per analysts at Choice Broking. The experts are optimistic in defence stocks.

Defence Stocks On February 25:

At the time of writing, BEL and HAL surged by nearly 1% each, while their counterpart BDL traded marginally lower. Among the gainer are Kaynes Technology who rose by 1.5%, Bharat Forge up by 1%, and DCX Systems who was among top gainers with nearly 4% upside. Also, Premier Explosives gained the most with over 5.11% upside, followed by over 1.2% surge in Solar Industries.

On the other hand, GRSE, Mazagon Dock, Paras Defence & Space, MTAR Technologies, Data Patterns, Cochin Shipyard and Avantel traded under pressure with marginal to nearly 1.5% downside.

Defence Sector Outlook:

According to Anand James, Chief Market Strategist, Geojit Investments, defense stocks have selectively come into the limelight lately, with companies involved in aircraft manufacturing, avionics, radar modules, UAVs, and related technologies gaining strength and attention since last week. Stocks such as HAL, BEL, and Bharat Forge have seen notable traction, with delivery volumes jumping nearly 100% above their key averages over the past two days.

Further, James said that the average RSI of the Nifty Defense Index constituents remains below 50, whereas the RSI levels of HAL, BEL, and Bharat Forge are around 60, indicating relative strength and momentum in these counters. Meanwhile, the shipbuilding segment has shown early signs of a reversal, but it may require broader participation before momentum builds further.

Meanwhile, analysts at Choice Broking highlighted that the defence companies combination of steady revenue growth, margin expansion and sustained year-on-year profitability in Q3FY26 is hinting at an endorsed multi-year earnings cycle for the sector.

Defence stocks have seen a favourable buying sentiment over the past few years due to the government's focus on strengthening its defence spending, record-high budget allocations and targeting Rs 50,000 crore export.

Analysts have pointed out that defence production and exports have witnessed significant surge, in-line with government's Make In India initiative.

For FY27, the government declared an record-breaking budget allocation of Rs 7.85 lakh crore for defence sector.

Defence Stocks To Buy:

Choice Broking has recommended BUY on seven defence stocks.

Apollo Micro Systems: BUY for Rs300 Target.

Azad Engineering: BUY for Rs 1,900 Target

Bharat Dynamics: BUY For Rs 1,965 Target

Bharat Electronics: BUY For Rs 550 Target

Centum Electronics: BUY For Rs 3,000 Target

Data Patterns: BUY For Rs 3,600 Target

Hindustan Aeronautics: BUY For Rs 4,780 Target

Zen Technologies; BUY For Rs 2,150 Target

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