Target: ₹4,060

CMP: ₹3,768

We continue to remain positive on the company, but more importantly, the nature of the story is clearly evolving. From what we see, the company is no longer just building capabilities – it is now getting structurally embedded into key defence platforms. This is an important shift, because growth going ahead is likely to be driven more by its positioning within long-cycle programmes.

What stood out to us is the increasing share of repeat, system-level opportunities (₹1,900 crore). This, along with the pipeline commentary, suggests that reported order book may not fully capture the revenue visibility. In our view, the company is now participating deeper across platform lifecycles (seekers, radars, EW, avionics), which typically leads to more predictable and compounding revenue streams over time.

On margins, the management commentary was quite telling. It is evident that profitability here is less dependent on competition intensity and more on control over design. Wherever the company is delivering system-level work, margins are meaningfully better. So, while quarterly margins may move based on mix, we do not see structural pressure on profitability.

Putting this together, we believe the company sits in a relatively niche position – high control, limited competition and increasing platform-level relevance. If execution sustains and pipeline conversion improves, earnings could surprise on the upside, though near-term trajectory will still depend on order inflows and execution pace.

Published on May 18, 2026