Motilal Oswal Eyes Up to 35% Upside in Four Defense Stocks
Brokerage firm Motilal Oswal has highlighted a bullish stance on several defense sector names, signaling investors could see meaningful upside over the coming months. While market dynamics can shift, the brokerage’s call centers on fundamentals such as order momentum, export potential, and earnings visibility. The four names that have drawn attention in this note are Bharat Electronics (BEL), Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), and Zen Technologies. A close look at each stock reveals why the broker believes there could be multi-bagger potential for patient investors.
Why Motilal Oswal Is Positive on These Defense Stocks
The defense sector in India has benefited from a stronger emphasis on self-reliance, export opportunities, and steady budget allocations. Motilal Oswal’s stance reflects a combination of resilient order pipelines, potential margin improvement, and the likelihood of earnings upgrades as production ramps up. While not a guaranteed path to high returns, the broker’s model points to upside in the range of the mid-teens to low-30s percent for the selected names over a reasonable investment horizon.
Bharat Electronics (BEL)
BEL, a long-standing supplier of electronic systems to the Indian armed forces, stands out for its diversified product mix and strong domestic demand tailwinds. The company benefits from recurring defense spends, potential defense modernization programs, and export opportunities in nearby markets. Motilal Oswal’s view hinges on sustainable order intake and potential margin improvements as product segments mature. Investors could see earnings resilience if BEL maintains its disciplined capital allocation and research-and-development cadence.
Hindustan Aeronautics (HAL)
HAL remains a cornerstone of India’s aerospace ambitions, with a broad platform base spanning aircraft, helicopters, and related components. The stock often reacts to defense budget signals, program wins, and progress on local manufacturing under the “Make in India” and export initiatives. The brokerage notes HAL’s long-cycle revenue streams can translate into steadier cash flows, supporting potential multiple expansion as execution improves and new program milestones are achieved.
Bharat Dynamics (BDL)
BDL, a key playback in the air-to-ground and surface-to-surface missile segment, could benefit from modernization and export demand. As defense procurement evolves, BDl’s pipeline of missile systems could underpin steady revenue growth. Motilal Oswal’s optimism rests on accelerating orders, improving gross margins, and the company’s ability to scale manufacturing to meet rising domestic and international demand.
Zen Technologies
Zen Technologies specializes in high-end defense training solutions, combat simulations, and integrated training ecosystems. In a market where doctrine modernization and upgraded training capabilities are increasingly prioritized, Zen’s product suite may see durable demand from armed forces and allied security agencies. The stock’s upside, as per the brokerage, would be tied to execution on orders and broader adoption of advanced training systems across rivals and new programs.
What Investors Should Consider
While the potential upside cited by Motilal Oswal is compelling, investors should approach defense stocks with a balanced view. Key considerations include regulatory and policy risk, execution timelines on large programs, currency headwinds for export sales, and the cyclical nature of government order flows. It’s prudent to assess each company’s balance sheet, backlog, processor of margin improvement, and exposure to non-defence segments that might affect volatility.
Bottom Line
The Motilal Oswal note highlights BEL, HAL, BDL, and Zen Technologies as names with the potential for up to 35% upside, rooted in order books, modernization themes, and earnings visibility. As with any defense-focused exposure, investors should align positions with a long-term horizon, maintain diversification, and stay attuned to policy shifts and program wins that can meaningfully impact these stocks.
