JM Financial expects Tejas Mk1A deliveries to drive Hindustan Aeronautics’ near-term growth, while manufacturing mix pressures margins; Bharat Electronics is forecast to deliver steadier results.
Hindustan Aeronautics Ltd is drawing the most attention in JM Financial’s latest defence-sector note, with Tejas Mk1A deliveries emerging as the key swing factor for the company’s near-term performance. The broker expects aircraft and helicopter deliveries in September 2026 to support revenue growth, but says a larger share of manufacturing income is likely to put pressure on gross margin and trim EBITDA margin quarter on quarter. Industry reporting has also pointed to progress on the Tejas Mk1A programme, with engine supply bottlenecks easing after GE Aerospace supplied more F404-IN20 engines and HAL working through the final technical issues around radar and weapons integration.
The broader delivery timetable remains important for investors because HAL is still trying to convert production readiness into aircraft handed over to the Indian Air Force. Reports have said the company has several Mk1A airframes at different stages of assembly and expects to start deliveries by the end of 2026, after flight testing and integration checks are completed. Separately, the defence ministry has set out a much longer schedule for the larger 97-aircraft Mk1A order, with deliveries due to begin in September 2027 and run through September 2033, underscoring how the current tranche is only the first phase of a multi-year programme.
Bharat Electronics Ltd, by contrast, is expected to report steadier operating performance. JM Financial estimates revenue growth of about 10% year on year and says gross margin should stay broadly stable, while operating leverage could lift EBITDA margin. The firm also expects BEL to secure order inflows of about Rs 3,100 crore in the quarter, which would add to the Rs 3,750 crore already booked in the previous quarter and take the company to roughly 27% of management’s annual order guidance of Rs 25,000 crore, excluding the Quick Reaction Surface-to-Air Missile programme. Any update on the timing of that QRSAM order is likely to be closely watched.
Among the smaller names in the defence pack, Data Patterns and Ideaforge are being viewed through the lens of order execution rather than headline growth. JM Financial expects Data Patterns’ revenue to come in at about Rs 230 crore, down 27% year on year because the comparable quarter last year benefited from a large execution cycle, while the main focus will be on how quickly the company turns its pipeline into fresh orders. Ideaforge is forecast to post revenue of about Rs 120 crore, roughly in line with management guidance that it should work through its outstanding order book by the end of the 2026-27 financial year. On ratings, the broker has a buy call on BEL and add ratings on HAL, Ideaforge Technology and Data Patterns, with target prices of Rs 485, Rs 5,210, Rs 905 and Rs 4,660 respectively.
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