Shares of Hindustan Aeronautics (HAL) slid 0.3% to ₹4,680 on Wednesday, just 1.5% shy of HSBC’s ₹6,350 target and 7.5% down over the past month. The brokerage’s research note, dated 28‑Sept‑2026, lists a 35.3% upside and follows a 24‑month performance that has seen HAL’s shares rise 6.4% year‑to‑date.
HSBC’s new coverage extends to six more defence names. Bharat Electronics (BEL) receives a buy with a ₹525 target, a 37.1% upside; Bharat Dynamics (BDY) is tagged hold at ₹1,370 (20% upside); Astra Microwave Products (AMPR) gets hold with a ₹1,800 target (13% upside); Data Patterns India (DP) and Solar Industries (SI) are rated hold and sell respectively, with SI’s target at ₹22,753 (18.2% upside) and DP’s at ₹2,860 (34.4% downside). Mazagon Dock Shipbuilders (MDPL) is downgraded to reduce, with a ₹1,860 target, 16.8% below its recent close.
The firm frames the broader defence sector as a pivot from import‑heavy reliance to a self‑sufficient, export‑oriented manufacturing hub. Domestic output has hit record levels, and 75% of capital spending is now sourced locally. HSBC projects FY27 defence spending to jump 2.8‑3.9×, from ₹23 billion in FY27 to between ₹65 billion and ₹91 billion, driven by a projected 40% CAGR in exports that rose from ₹680 crore in FY14 to ₹38,400 crore in FY26.
Risks cited include the lag between order receipt and revenue recognition, potential supply‑chain bottlenecks for key components, and the premium valuation of defence stocks relative to the broader index. HSBC warns that any execution shortfall could dent earnings expectations, especially as the Nifty Defence index has already outperformed European and U.S. peers.
Looking ahead, HSBC sees orders for fighter jets, missiles, submarines, missile‑defence systems, and drones as the main growth drivers. The brokerage estimates that the current order book will sustain multi‑year expansion, and it urges investors to monitor the FY28 guidance release slated for October 2027 for further clarity on the sector’s trajectory.