Defence was seen as a top trade in March at the peak of the US-Iran war. While stocks such as Hindustan Aeronautics Ltd (HAL), Zen Technologies, Data Patterns (India) Ltd and Bharat Dynamics Ltd (BDL) did see some mutual fund (MF) inflows for the month, Bharat Electronics Ltd (BEL) witnessed heavy MF selling. Defence shipbuilding names such as Cochin Shipyard Ltd, Mazagon Dock Shipbuilders Ltd and Garden Reach Shipbuilders and Engineers (GRSE) failed to attract MF interest, data available with PRIME Database suggests.  

March saw Nifty falling 11.3 per cent, but equity-oriented mutual funds recorded strong net inflows of Rs 40,500 crore. 

Among the stocks that attracted MF buying was HAL, where mutual funds raised their stake to 5.84 per cent in March from 5.73 per cent in February, purchasing a net Rs 272 crore worth of shares.

Nuvama in an April 10 note said India is entering a more calibrated phase of the defence upcycle, where incremental ordering pace shall moderate and the focus shifts to execution quality, spending mix and cash flow delivery.

"We continue to prefer defence electronics/subsystem players (BEL, Data Patterns (India) Ltd) and consumable-linked plays (SOIL), given faster execution cycles, lower import dependence and superior margin profile, over integrators such as HAL and BDL, where execution and ordering tempo could be more variable," it said. 

The brokerage said defence sector entered Q4FY26 with robust order visibility, supported by sustained inflows and a healthy pipeline; backlogs are no longer a constraint. However, incremental large-ticket ordering is likely to be more measured with growth increasingly driven by repeat and replenishment orders. While visibility remains strong, the slope of order inflow growth may moderate, it said.

PL Capital in its Q4 preview note said defence companies are likely to report revenue growth of 2 per cent YoY in the March quarter, due to ongoing supply chain disruptions amid geopolitical tensions. Ebitda margin is likely to contract due to an unfavorable mix, it said,

For the quarter, BEL announced OI worth Rs 12,550 crore for Q4FY26. HAL announced orders worth Rs 7,010 in Q4FY26, including Rs 1800 crore order for Dhruv, Rs 2,300 crore order for Dornier and Rs 2900 crore oeder for ALH Mk-III. 

"AoN approved by DAC for FY26 stands at Rs 9.8 lakh crore, with March 2026 AoN of Rs 2.4 lakh crore expected to translate into incremental OI, with BEL, HAL, etc., being key beneficiaries. Continued policy thrust on defense indigenization should further support sustained order booking momentum across multiple platforms and programs like ALH, AMCA and QRSAM," PL Capital said.