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Defence Sector – Govt clears 97 LCA jets acquisition worth Rs 62,000 crore from HAL

ICICIdirect Research 22 Aug 2025 DISCLAIMER

Cabinet Committee of Security (CCS) has cleared the acquisition of additional 97 LCA Tejas Mark 1A fighter jets from Hindustan Aeronautics (HAL) at a cost of Rs 62,000 crore, marking the largest-ever order for indigenous combat aircraft.  
HAL is expected to receive this order this year and will have backlog of 180 LCA Mk1A jets. Post this order, total order backlog is expected to reach Rs 2.5 lakh crore (8x TTM revenue), providing strong revenue visibility.
We believe that existing order of 83 LCAs is also witnessing pick-up in execution after the commencement of engines delivery from GE. Manufacturing capacity of these fighter jets has also been increased to 24 annually, which ensures completion of existing order by FY29E. Moreover, company further plans to increase the manufacturing capacity to 30 jets annually. 
Along with HAL, other companies such as Bharat Electronics (BEL), Astra Microwave, Data patterns are also expected to gain from this contract as they will be involved in supplying electronic systems/sub-systems like avionics, radars, electronic warfare systems etc. 
Dynamatic Technologies that provides front fuselage for the current backlog (83 Mark 1A) may also likely contribute towards structural assemblies going ahead. Bharat Dynamics (BDL) could see demand linked to missiles and weapon systems integrated with the Tejas fleet.   
We remain positive on the defence sector, considering the strong focus on increasing capital outlay for indigenised platforms and reducing procurement timelines of these platforms. This gives strong visibility on orders inflows in coming years and faster execution
We recommend HAL (target price of 6100), BEL (target price of 450), Astra Microwave (target price of 1270), Data Patterns (target price of 3130), and Dynamatic Technologies (target price of 8400) and Midhani (target price 530)

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