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Defence Sector – Potentially the strongest multi-year domestic capex theme

ICICIdirect Research 21 Aug 2026 DISCLAIMER

In the PM Modi’s Independence Day address, the key focus was on development and manufacturing of indigenous next-generation weapons like drones, counter-drone systems and Sudarshan Chakra air defence system
Recent conflicts already show that kamikaze drones/anti-drone systems are the centre of modern warfare. India is also speeding up procurement of indigenous drones under Rs 20000 crore fast track procedure. Moreover, the recent AoN approvals worth Rs 52000 (received in July 2026) included these key weapon systems, showing the India’s future ready vision for combat warfare
We believe that Indian defence companies would benefit significantly in the coming years as these new-generation platforms would generate substantial opportunity. Zen Technologies would be the biggest beneficiary of counter-drone systems opportunity as these systems would likely drive the future growth for the company. Solar Industries would also benefit significantly from increasing demand for Kamikaze drones, anti-drones and other air-defence systems. Moreover, Bharat Electronics would remain key beneficiary and production partner in Sudarshan Chakra air-defence system.
We are positive on all three companies with a target price of Bharat Electronics (₹ 530), Solar Industries (₹ 23,200) and Zen Technologies (₹ 2170)

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