--- title: "Defence push quadruples with latest DAC approvals, execution to now be in focus" type: "News" locale: "en" url: "https://longbridge.com/en/news/281470473.md" description: "The Defence Acquisition Council (DAC) has approved procurement proposals worth Rs 2.38 lakh crore, bringing total approvals for FY26 to Rs 9.3 lakh crore, nearly four times last year. This reflects a strong policy push for defence expansion, primarily led by the Indian Air Force. Analysts note that execution timelines will be crucial for translating approvals into revenues, with significant opportunities for domestic companies like Bharat Electronics and Hindustan Aeronautics. However, execution challenges and supply chain constraints may impact future performance, with a long-term positive outlook for the sector despite near-term headwinds." datetime: "2026-04-02T05:33:57.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/281470473.md) - [en](https://longbridge.com/en/news/281470473.md) - [zh-HK](https://longbridge.com/zh-HK/news/281470473.md) --- # Defence push quadruples with latest DAC approvals, execution to now be in focus The Defence Acquisition Council (DAC) has approved procurement proposals worth Rs 2.38 lakh crore on March 27, taking total approvals for YTD FY26 to Rs 9.3 lakh crore, i.e. nearly four times last year’s Rs 2.5 lakh crore, according to Kotak estimates. The sharp rise shows a strong policy push toward defence expansion, though analysts add that execution timelines will determine how quickly this momentum translates into actual revenues. The latest approvals were led by the Indian Air Force, with large programmes such as the S-400 air defence system and 60 medium transport aircraft accounting for a substantial share of the outlay. While a significant portion is expected to involve global suppliers, domestic companies are likely to benefit from select opportunities. A Kotak Institutional Equities note added that Bharat Electronics Limited (BEL) could be involved in three to four orders, while Hindustan Aeronautics Limited (HAL), Larsen & Toubro and Garden Reach Shipbuilders & Engineers may also see opportunities. **Scale-up signals structural shift** Analysts see the sharp rise in approvals as a structural shift in defence spending, with a build-up of Acceptance of Necessity (AoN) clearances now translating into a stronger order pipeline. “In terms of DAC approvals, with the Rs 2.38 lakh crore pipeline, we are seeing a clear shift. Structurally, the opportunity remains very strong. Annual approvals of over Rs 6.75 lakh crore are significant, especially when compared to pre-FY19 levels of Rs 40,000–50,000 crore annually. Since FY22, approvals have been consistently strong, reinforcing the long-term defence story,” Amit Anwani of PL Capital noted. He added that large platforms such as Rafale-related programmes and systems like the S-400 will form a significant part of future orders, alongside increasing urgency across aircraft, submarines and missile systems. **Execution remains key monitorable** Despite the strong pipeline, execution remains the key, with long gestation periods continuing to weigh on the sector. “Approvals are just the starting point,” Ankit Soni of Mirae Asset Sharekhan said. “From approvals to deliveries, it is a 5–8-year cycle. Even converting these into firm orders can take close to a year,” he explained. Kotak Institutional Equities noted that large programmes such as the P-75I submarine project, next-generation corvettes and the QRSAM system could see finalisation pushed to FY27. Soni agreed that execution delays have been persistent and that while capital expenditure has picked up, it will take time before meaningful acceleration is visible. **Order inflows and supply constraints** Kotak noted that Bharat Electronics has secured around Rs 22,000 crore in orders so far against a target of Rs 27,000 crore, implying a potential miss if timelines slip further. It added that while short delays may not materially affect execution, prolonged slippages could pose risks to out-year estimates. Execution challenges are also linked to supply chain constraints and localisation efforts. “Execution challenges remain, particularly around component availability and the staggered nature of vendor-based manufacturing,” Anwani said, adding that localisation and technology transfer are progressing gradually across the sector. At a company level, divergence in execution is evident. For example, Anwani explained that Bharat Electronics has made significant progress in system-level localisation, reducing dependence on imports, while companies such as Hindustan Aeronautics continue to face supply-side challenges, leading to delays in programmes such as LCA and ALH Dhruv. The divergence is also reflected in financial performance. Kotak highlighted that Bharat Electronics reported around 16% revenue growth, broadly in line with expectations, while Garden Reach Shipbuilders delivered strong performance. In contrast, Hindustan Aeronautics reported about 4% revenue growth in its provisional numbers, below guidance due to supply disruptions. **Visibility, long-term outlook** Going ahead, Soni said BEL remains relatively better placed within the sector, supported by strong margins and steady order visibility. On HAL, he said, “You may not see a meaningful pickup this year or next. Deliveries are likely to remain back-ended.” Despite near-term headwinds, the broader outlook remains constructive. “Valuations are elevated, but supported by long-term visibility. You’re looking at 5–8 years of revenue visibility, which justifies premium multiples to some extent,” Soni said. Within the sector, performance is expected to diverge. BEL is seen as relatively better placed, supported by strong margins and steady order visibility. “BEL could capture a meaningful share of orders and is already delivering strong margins above 30%,” Soni said. On the other hand, HAL continues to face execution challenges. “You may not see a meaningful pickup this year or next. Deliveries are likely to remain back-ended,” he said, citing engine supply issues and testing delays. Anwani also pointed to how execution differences are reflecting in stock and earnings trends. “For instance, Hindustan Aeronautics has been largely sideways for the past nine months, while Bharat Electronics has also moved in a range,” he said. Valuations for some companies, particularly Hindustan Aeronautics, he noted are now relatively comfortable at around 25–27x forward earnings. But execution remains critical. If companies fail to deliver consistently each year, earnings visibility gets pushed out. For example, Hindustan Aeronautics reported only about 4% revenue growth in its provisional numbers, versus guidance of over 8%, citing supply disruptions linked to geopolitical issues affecting LCA (Light Combat Aircraft) and ALH (Advance Light Helicopters) programs,” he added. On the other hand, some companies have delivered better provisional numbers. Garden Reach Shipbuilders posted strong performance, while Bharat Electronics delivered around 16% revenue growth, broadly in line with expectations, with mid-single-digit growth in the fourth quarter. “More updates from companies like Bharat Dynamics are awaited, but the broader trend is clear, execution and supply chain stability are now the key focus areas,” he said. From an investment perspective, Anwani maintained a constructive stance. “A practical approach would be to take a longer-term view and accumulate stocks when valuations correct towards historical averages,” he said. **Disclaimer** _Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions._ ### Related Stocks - [512680.CN](https://longbridge.com/en/quote/512680.CN.md) - [512710.CN](https://longbridge.com/en/quote/512710.CN.md) - [160643.CN](https://longbridge.com/en/quote/160643.CN.md) - [512810.CN](https://longbridge.com/en/quote/512810.CN.md) - [563380.CN](https://longbridge.com/en/quote/563380.CN.md) - [512660.CN](https://longbridge.com/en/quote/512660.CN.md) ## Related News & Research - [ZAWYA: Axis Communications to showcase the future of intelligent security at ISNR Abu Dhabi 2026](https://longbridge.com/en/news/286386354.md) - [IPL 2026: Kuldip, Gleeson named injury replacements for Khaleel-Thushara](https://longbridge.com/en/news/286585285.md) - [UK defence minister says further instability not in national interest](https://longbridge.com/en/news/286079624.md) - [Women under 35 led mutual fund investments in FY26, shows data](https://longbridge.com/en/news/286945674.md) - [Anduril secures $5B to boost autonomous warship program](https://longbridge.com/en/news/286340721.md)