Missiles, Jets, and Now Drones: 3 Stocks Riding the Defence Shift

#1 Bharat Dynamics

First on our list is the stock of Bharat Dynamics. The company is an Indian public sector company established in 1970, specialising in the manufacture of guided missile systems and allied defence equipment for the Indian Armed Forces.

The company plays a crucial role as the prime production agency for missiles developed by the Defence Research and Development Organisation (DRDO), producing various missile systems including Prithvi, Agni, Akash, and Nag missiles.

Financial Highlights of Bharat Dynamics

On the financial front, the company's revenues were Rs 5,666 m in Q3 FY26 vs Rs 8,321 m YoY. The net profits for Q3 FY26 dropped to Rs 729 m vs Rs 1,471 m YoY.

Moving ahead, Bharat Dynamics is expected to establish a propellant manufacturing and weapon systems integration facility in Donakonda, located in Prakasam district, with an investment of Rs 1,200 billion (bn).

Additionally, another project focused on the manufacturing, assembly, and testing of defence equipment such as underwater weapons and torpedoes is planned to be set up in Anakapalli district.

Strong government defence spending and indigenisation policies under Atmanirbhar Bharat boost demand for domestic defence players like BDL.

Rising geopolitical tensions globally and regionally often increase defence procurement and export interest - which can be positive for defence manufacturers.

#2 Zen Technologies

Next on our list is Zen Technologies.

Zen Technologies is an expert in land-based force simulation training, developing state-of-the-art simulators that enable military personnel to rehearse for actual situations in safe settings.

Financial Highlights of Zen Technologies

Zen Technologies delivered a resilient performance for Q3 FY26 reporting a 16.8% growth in consolidated revenue and a healthy profit after tax growth of 30.6% despite headwinds in terms of the timing of the order inflows of the last nine months.

Consolidated revenues for the quarter stood at Rs 17,780 m. Net profits were Rs 560 m. The net profit was despite higher employee benefit expenses, ESOP expenses due to new employee stock grants, and a one-time impact arising from the implementation of the new labour codes.

The consolidated order book position as of 31 January 2026 was Rs 14.27 bn. The liquidity position of the group is strong with around Rs 11.88 bn available in cash and cash equivalent and a net debt of zero as of 31 December 2025.

Government defence spending in India has been rising, boosting demand for domestic suppliers, which supports the company's growth.

Zen is evolving from a niche simulator maker into a broader defence technology enterprise, increasing long-term growth potential.

#3 Paras Defence and Space Technologies

Next on the list is Paras Defence and Space Technologies.

Paras Defence and Space Technologies is an Indian defence and space engineering company specialising in indigenously designed, developed, and manufactured products and solutions.

The company is making progress as far as drones is concerned. Paras Heven Advanced Drones Private Ltd was incorporated as a new subsidiary. It's a joint venture in which Paras Defence holds 51%, and Heven Drones from Israel owns the other 49%.

Financial Highlights of Paras Defence and Space Technologies

On the financial front, the company reported revenues of Rs 1,064 m for Q3 FY26, against Rs 871 m YoY. The net profits during the same period were Rs 169 m vs Rs 139 m YoY.

Paras Defence is expanding into semiconductors, avionics, and advanced subsystems - potential high-growth adjacencies beyond classic defence optics.

The company has a diversified product portfolio (optics, electronics, heavy engineering) and a growing order book which supports future revenue visibility.

Should You Consider Defence Stocks?

Defence stocks associated with missiles and drones have been rising. Markets hate uncertainty - defence stocks often move because of fear rather than fundamentals. If tensions ease or conflict resolves quicker than expected, defensive positioning can reverse quickly.

In markets, expensive valuations often lead to significant pullbacks if sentiment shifts, even if fundamentals remain intact. Broad earnings execution, order timelines and delivery risks in complex defence projects can cause volatility.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...