Synopsis: Defence stocks with PEG ratios below 1 may indicate undervaluation relative to growth potential. Notable names include GRSE, Sigma Advanced Systems, Sika Interplant Systems, Krishna Defence, CFF Fluid Control, and C2C Advanced Systems, all supported by strong profitability, healthy balance sheets, and robust defence-sector growth opportunities.
A PEG ratio below 1 in defence stocks is often seen as a sign that the stock may be undervalued relative to its expected earnings growth. It can indicate that the market is pricing in lower expectations despite the company having strong growth prospects.
India’s defence sector is growing rapidly due to strong government emphasis on indigenisation, increased defence budget allocations, and strategic reforms under the “Make in India” initiative. Focusing on self-reliance, domestic manufacturing, and technology development is boosting local production. Rising exports and private sector participation are further strengthening the industry’s global competitiveness.
For investors, such stocks may appear attractive when earnings visibility is steady and long-term growth in the defence sector remains intact. However, it is important to evaluate whether the expected growth is both realistic and can be sustained over the long term. Here’s the list of stocks to look out for
Garden Reach Shipbuilders & Engineers Ltd
Garden Reach Shipbuilders & Engineers Ltd (GRSE) is a government-owned defence shipyard under India’s Ministry of Defence. Based in Kolkata, it designs and builds warships, patrol vessels, landing craft, and auxiliary ships primarily for the Indian Navy and Coast Guard. GRSE also manufactures marine engineering equipment and undertakes ship repairs and modernisation projects.
With a market capitalisation of Rs. 32,716 crores, the company’s PEG ratio stood at 0.86, with an ROCE of 43.0 percent and ROE of 31.8 per cent and a debt to equity of 0.01, showcasing strong overall financial performance metrics.
GRSE’s order book stood at Rs. 15,324.13 crore, spanning 9 projects across 39 platforms. Management highlighted that the reduction below the Rs. 20,000 crore mark, seen for the first time in five years, should be viewed positively, as it reflects a stronger execution pace and faster project delivery.
Sigma Advanced System Ltd
Sigma Advanced Systems Ltd is an Indian defence and aerospace technology company specialising in electronic warfare, avionics, radar subsystems, and mission-critical defence electronics. The company supplies products and solutions to defence organisations, public-sector undertakings, and aerospace customers. Its focus is on indigenous technology development supporting India’s defence modernisation initiatives.
With a market capitalisation of Rs. 9,719 crores, the company’s PEG ratio stood at 0.14, with an ROCE of 60.8 percent and ROE of 90.6 per cent and a debt to equity of 0.71, showcasing strong overall financial performance metrics.
Sika Interplant Systems Ltd
Sika Interplant Systems Ltd provides engineering products and services for the aerospace, defence, and automotive sectors. The company develops hydraulic systems, test equipment, maintenance solutions, and engineering services for military and civilian applications. It works with major defence organisations and aircraft manufacturers, supporting indigenous aerospace capabilities and specialised engineering requirements.
With a market capitalisation of Rs. 2,459 crores, the company’s PEG ratio stood at 0.92, with an ROCE of 35.2 percent and ROE of 26.1 per cent and a debt to equity of 0.00, showcasing strong overall financial performance metrics.
Krishna Defence & Allied Industries Ltd
Krishna Defence & Allied Industries Ltd manufactures defence and security products, including specialised containers, shelters, naval equipment, and high-performance composite solutions. The company serves the Indian armed forces, defence public-sector enterprises, and private-sector customers. Its offerings support military logistics, mobility, protection systems, and infrastructure requirements across diverse operational environments.
With a market capitalisation of Rs. 2,075 crores, the company’s PEG ratio stood at 0.56, with an ROCE of 30.8 percent and ROE of 23.7 per cent and a debt to equity of 0.01, showcasing strong overall financial performance metrics.
Krishna Defence & Allied Industries, as of March 31, 2026, reports a strong and stable unexecuted order book of Rs 1,034 million. In addition, it has a robust tender pipeline of Rs 2,210 million, reflecting healthy growth opportunities that are currently under active pursuit.
CFF Fluid Control Ltd
CFF Fluid Control Ltd designs and manufactures critical fluid-control systems and mechanical equipment for defence and industrial applications. The company is particularly active in naval programs, supplying propulsion-related components, fluid systems, and specialised engineering products. It serves defence shipyards, naval platforms, and industrial customers while emphasising precision manufacturing and reliability.
With a market capitalisation of Rs. 1,781 crores, the company’s PEG ratio stood at 0.77, with an ROCE of 23.5 percent and ROE of 18.9 per cent and a debt to equity of 0.07, showcasing strong overall financial performance metrics.
C2C Advanced Systems Ltd
C2C Advanced Systems Ltd is a defence technology company focused on artificial intelligence, autonomous systems, simulation technologies, and command-and-control solutions. It develops software-driven products for military planning, training, surveillance, and mission support applications. The company contributes to India’s defence innovation ecosystem through advanced digital technologies and indigenous capability development.
With a market capitalisation of Rs. 679 crores, the company’s PEG ratio stood at 0.11, with an ROCE of 26.2 percent and ROE of 21.0 per cent and a debt to equity of 0.22, showcasing strong overall financial performance metrics.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
