India is recognised as one of the world’s most powerful military forces and holds significant strategic value for its government. Within the Indian defence sector, the three largest market segments are military fixed-wing aircraft, naval vessels and surface combatants, and missile and missile defence systems. Leading the country’s defence manufacturing efforts are prominent public-sector companies such as Bharat Electronics Ltd. (BEL) and Hindustan Aeronautics Limited (HAL).
For FY26, the Ministry of Defence (MoD) allocated a total budget of Rs. 6.81 lakh crore — a 9.5 percent increase compared to the previous year budget. Out of this, Rs. 1.80 lakh crore has been earmarked for capex, covering the purchase of new weapons, aircraft, warships, and other key military equipment. Looking ahead, the government aims to boost domestic defence manufacturing to nearly $34.7 billion by FY29.
On the export front, India surpassed Rs. 21,000 crore in defence exports in CY24 and is now targeting Rs. 50,000 crore by 2029. Over the next five years, India plans to export military hardware worth around Rs. 35,000 crore.
Here’s a comparison between the railway stocks of Hindustan Aeronautics Limited and Bharat Electronics Limited to provide a clear overview of both companies:
Price Movement
Shares of Hindustan Aeronautics, with a market cap of Rs. 3.32 lakh crores, closed in the green at Rs. 4,971.95 on BSE, up by around 1.5 percent on Friday. The stock has delivered negative returns of nearly 6 percent over a one-year period, but gained over 2 percent in the last one month. With a market cap of Rs. 2.98 lakh crores, shares of Bharat Electronics closed in the green at Rs. 408.05 on BSE, up by around 2.4 percent. The stock has delivered positive returns of nearly 31 percent over a one-year period, and gained over 12 percent in the last one month.
Business Segments
Hindustan Aeronautics Ltd. (HAL) offers a diverse range of products and services across multiple segments. In the aircraft category, its portfolio includes platforms like the Light Combat Aircraft (LCA), HTT-40 trainer, Dornier, Intermediate Jet Trainer (IJT), SU-30 MKI, and HAWK. For civil aviation, HAL produces models such as the Dhruv Advanced Light Helicopter (ALH) and the Hindustan-228.
In the Helicopters category, HAL offers Dhruv, Rudra, Light Combat Helicopter (LCH), Light Utility Helicopter (LUH), and legacy models including Cheetal, Lancer, Chetak, and Cheetah. In the space segment, the company contributes to critical components like heat shield assemblies, nose cone assemblies, tanks, and shrouds. The Systems segment forms another crucial part of HAL’s operations, covering avionics, accessories, materials, and maintenance, repair, and overhaul (MRO) services.
In the Defence segment, BEL’s core focus lies in developing advanced electronics equipment, systems, and services for the Indian defence sector. Its defence offerings include radar and fire control systems, weapon systems, communication, network-centric systems (C4I), electronic warfare systems, avionics, anti-submarine warfare systems & sonars, electro-optics, tank electronics, gun upgrades, strategic components, arms & ammunitions, seekers & missiles, network & cyber security.
In the non-defence segment, BEL provides a wide range of technologies and services such as homeland security and smart city solutions, cybersecurity, electronic voting machines (EVMs) and VVPATs, software and IT services, healthcare and medical electronics, civil aviation systems, solar cells/railway/metro/airport solutions, space electronics, and secure communications.
Order Book
As of FY25, HAL reported an order book of Rs. 1,89,300 crore, more than double the Rs. 94,127 crore recorded in FY24, despite achieving a turnover of Rs. 30,105 crore during the year.
Looking ahead, HAL anticipates further orders worth approximately Rs. 1 lakh crore over the next one to two years, including 97 LCA Mk1A fighter jets, 143 Advanced Light Helicopters (ALH) for the Indian Air Force and Army and more. Another Rs. 20,000 crore in ROH contracts is also expected to be added to the pipeline. In contrast, BEL reported an order book of Rs. 71,650 crore as of 1st April 2025, backed by an order inflow of Rs. 18,000 crore.
Another key opportunity lies in the Next-Generation Corvette (NGC) program, where BEL is expected to supply nearly all electronic systems. The NGC contracts could be worth between Rs. 6,000 and Rs. 10,000 crore, spanning two shipyards and involving 10-12 subsystems per vessel.
Growth Guidance
HAL has provided a revenue growth guidance of 8-10 percent for FY26, though management believes there’s potential to cross into double-digit growth as project execution picks up pace. From FY27 onwards, HAL expects consistent double-digit growth as execution ramps up. In the medium term, the company aims to sustain this double-digit growth trajectory.
On the profitability front, HAL is targeting an EBITDA margin (including other income) of 38-39 percent, with core operational EBITDA at around 31 percent, and expects to maintain these levels over the medium term.
BEL is projecting ~15 percent revenue growth for FY26, with an expected EBITDA margin of around 27 percent. The company aims for order inflows exceeding Rs. 27,000 crore, excluding the large QRSAM tender, and plans to invest about Rs. 1,600 crore in R&D and over Rs. 1,000 crore in capex. The revenue split is expected to remain heavily skewed toward defence, with a 90:10 ratio between defence and non-defence segments.
BEL also has an export target of $120 million for FY26, aiming for over 15 percent growth. As part of its long-term strategy, BEL plans to maintain an annual capex of more than Rs. 1,000 crore, including the setting up of new manufacturing facilities at key locations across India, some of which are expected to surpass the scale of its existing plants.
Looking at the next five years, BEL is targeting a revenue CAGR of 15-17.5 percent (with a goal to touch 20 percent), and net profit is projected to grow at over 20 percent, fuelled by strong in-house R&D and a push for greater indigenisation.
Financial Performance
In Q4 FY25, HAL reported a marginal decline in revenue from operations by nearly 7 percent to Rs. 13,700 crores, while its net profit also decreased around 8 percent YoY to Rs. 3,977 crores.
Additionally, the company’s revenue increased by a 3-year CAGR of nearly 8 percent to Rs. 30,981 crores in FY25, as against Rs. 24,620 crores in FY22, while the net profit grew by a CAGR of 18 percent, from Rs. 5,080 crores to Rs. 8,364 crores, over the same period.
In contrast, BEL reported a marginal rise in revenue from operations by nearly 7 percent to Rs. 9,150 crores in Q4 FY25, while its net profit also increased by around 18 percent YoY to Rs. 2,127 crores.
Further, the revenue of Bharat Electronics increased by a 3-year CAGR of nearly 15.65 percent to Rs. 23,769 crores in FY25, as against Rs. 15,368 crores in FY22, while the net profit grew by a CAGR of over 30 percent, from Rs. 2,400 crores to Rs. 5,323 crores, over the same period.
Written by Shivani Singh
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