Defence stocks remained in focus after Choice Institutional Equities reiterated a positive outlook on the sector and assigned buy ratings to Hindustan Aeronautics, Bharat Electronics and Zen Technologies, citing robust order inflows, healthy execution pipelines and improving domestic manufacturing capabilities.

According to the brokerage, the sector continues to benefit from rising military modernisation, higher localisation, export opportunities and sustained government spending, with companies across aerospace, radars, electronic warfare and anti-drone systems witnessing strong demand visibility.

Choice Institutional Equities maintained a buy rating on Hindustan Aeronautics with a target price of ₹5,050 against the current market price of ₹4,304. The brokerage highlighted the company’s record order book of ₹2.54 lakh crore and expected additional orders worth ₹90,000 crore over the next two years. It projected FY27 revenue growth of 12.3 per cent y-o-y while EBITDA margins are likely to remain in the 30-31 per cent range.

The brokerage also retained buy on Bharat Electronics with a target price of ₹500 against CMP of ₹411, driven by expectations of more than ₹55,000 crore order inflows in FY27. Choice Institutional Equities said Bharat Electronics remains well placed to benefit from programmes such as QRSAM, Project 75I submarines and directed energy weapons. The company is expected to post 17.1 per cent y-o-y revenue growth in FY27 with EBITDA margins above 30 per cent.

Zen Technologies received a buy rating with a target price of ₹1,850 versus CMP of ₹1,665. The brokerage said the company is emerging as a key player in anti-drone systems, simulators and autonomous defence technologies. It highlighted Zen’s ₹1,336 crore order book and ₹4,000 crore cumulative revenue guidance for FY27 and FY28.

Among add-rated stocks, Choice Institutional Equities maintained add on Data Patterns with a target price of ₹4,060 against CMP of ₹4,043. The brokerage pointed to strong traction in programmes such as BrahMos seekers, AMCA and electronic warfare systems, alongside a 216 per cent y-o-y jump in FY26 order inflows. The company reported 30.6 per cent y-o-y revenue growth in FY26 and expects EBITDA margins of 38-40 per cent.

Apollo Micro Systems was also rated add with a target price of ₹365 against CMP of ₹409. The brokerage highlighted Apollo’s ₹1,432 crore order book, export opportunities and expansion into missiles, torpedoes, UAVs and directed energy weapons. It expects the company to deliver 59.5 per cent y-o-y revenue growth in FY27.

Choice Institutional Equities retained add on Cyient DLM with a target price of ₹3,300 versus CMP of ₹3,484, citing improving focus on India operations after restructuring overseas businesses. The brokerage expects the company to deliver medium-term standalone revenue CAGR of 25-30 per cent.

Meanwhile, Azad Engineering and Astra Microwave Products were assigned reduce ratings due to valuation concerns following sharp stock rallies.

Choice Institutional Equities set a target price of ₹1,900 for Azad Engineering against CMP of ₹2,017, despite highlighting the company’s ₹6,500 crore rolling order book and guidance for more than 25 per cent revenue growth in FY27.

Astra Microwave Products received a reduce rating with a target price of ₹1,300. The brokerage said the company continues to benefit from strong opportunities in radar, missile and electronic warfare programmes, but current valuations limit near-term upside potential. Astra expects FY27 revenue growth of 15-20 per cent y-o-y and aims to triple revenue over the next five years.

Published on May 31, 2026