BEL, HAL, and Solar industries: Decoding the ₹10 lakh crore order pipeline ahead of budget 2026

By Admin

28 Jan, 2026

Introduction: From Visibility to Execution
India’s defence sector has entered a decisive phase. With ₹1.8 lakh crore allocated in FY25 and more than 50% already utilised in H1FY26, the focus has clearly shifted from order visibility to execution capability. Add to this nearly ₹9 lakh crore of Acceptances of Necessity approved over the last three years and an estimated ₹10 lakh crore pipeline for Defence Public Sector Undertakings, and the scale of opportunity becomes unmistakable. As expectations build around a 10–15% hike in Budget 2026, taking defence spending close to ₹2 lakh crore, the key question is no longer “who will get orders?” but “who can deliver?”. This article examines three companies best positioned in this environment.

The Defence Spending Backdrop
Defence expenditure in India has transitioned from discretionary to essential. Despite heightened geopolitical tensions and a reshaping global arms race, India’s defence spend remains around 1.9% of GDP, well below the recommended 3%. This structural gap suggests sustained budgetary support over the coming years. According to institutional estimates, defence investing is now about execution, as order backlogs across key players stand at three to five times their annual revenues.

Company Focus 1: Bharat Electronics
The System Integrator with a ₹1 Lakh Crore Pipeline

Business Overview
Bharat Electronics is a state-owned enterprise under the Ministry of Defence and a critical supplier of advanced electronic systems to the Indian Armed Forces. Its portfolio spans missile systems, radars and surveillance, electronic warfare, naval systems, and avionics, positioning it as a core systems integrator rather than just a component supplier.

Order Book and Revenue Visibility
As of 31 October 2025, the company’s order book stood at approximately ₹75,600 crore, offering around three years of revenue visibility based on trailing twelve-month revenue of ₹25,152 crore. Key orders include LRSAM, electronic fuses, BMP-2 upgrades, and Akash systems. Beyond this, the company has identified a project pipeline exceeding ₹1 lakh crore over the next 18–24 months, supported by localisation and modernisation initiatives that are expected to grow faster than the overall defence budget.

Margin Strength and Execution Track Record
The company has consistently beaten margin expectations, guiding for operating margins above 27%. Management confidence in execution remains high, with on-time delivery performance estimated at 90–95%, reinforcing credibility as order sizes scale up.

QRSAM as a Major Catalyst
One of the most significant near-term triggers is the potential ₹30,000 crore QRSAM order, which the company expects to secure by March 2026. Following a 12–18 month First of Production Model phase, revenue recognition would begin in the subsequent financial year, with total execution spread over five to six years.

Strategic Investments and Long-Term Vision
To support rising complexity and scale, the company plans to invest at least ₹1,400 crore over the next three to four years, including a 920-acre defence system integration complex in Andhra Pradesh. This facility will focus on integration, testing, and qualification of complex missile systems. The strategic ambition is clear: evolve from an electronics supplier to a full-fledged system integrator for airborne and missile platforms.

Company Focus 2: Hindustan Aeronautics
Managing a Record Order Book Amid Supply Constraints

Business Overview
Hindustan Aeronautics is India’s primary manufacturer of military aircraft and helicopters, also providing repair and maintenance services. While it holds an unprecedented order backlog, near-term execution is constrained by global and domestic supply chain bottlenecks.

Order Backlog and Visibility
The company’s order book stands at around ₹2.3 lakh crore, equivalent to nearly seven times its trailing twelve-month revenue. Beyond this, management estimates a staggering pipeline of over ₹4 lakh crore expected to materialise over the next decade. Despite this visibility, execution challenges are likely to persist over the next two to three years.

GE Engine Bottleneck and Near-Term Risks
Delays in the supply of GE-404 engines for LCA Tejas Mk1A have emerged as a key constraint. With only five engines received so far, deliveries in FY26 are expected to be limited, contributing only marginally to revenue. The LCA delivery schedule remains the most critical monitorable for near-term performance.

Long-Term Platforms and Strategic Importance
Beyond Tejas, platforms such as ALH Dhruv, Dornier, and HTT-40 face delays due to regulatory and supply-side issues. However, the company remains the primary integrator for Indian military aviation. The long-term pipeline includes major indigenous programmes across helicopters and combat aircraft, with the AMCA programme alone estimated at over ₹1 trillion by the mid-2030s.

Competitive Landscape and Localisation Efforts
Competition is intensifying as private-sector consortia bid for future platforms, potentially diluting incumbency advantages. In response, the company is accelerating localisation through partnerships with domestic suppliers to reduce dependence on imported components and mitigate future bottlenecks.

Company Focus 3: Solar Industries
From Industrial Explosives to High-Tech Defence Munitions

Business Overview
Solar Industries is one of India’s largest manufacturers of industrial explosives, with around 24% market share and the world’s largest single-location cartridge plant in Nagpur. The company is now rapidly transforming into a major defence manufacturer.

Defence Revenue Scaling Strategy
Defence revenue crossed ₹900 crore in H1FY26, accounting for 22% of total revenue. Management aims to increase defence contribution from roughly 30% in FY26 to 50% by FY28. This pivot is supported by a defence order book of around ₹15,500 crore, providing roughly two years of revenue visibility.

Key Products and Execution Milestones
A significant portion of the order book is linked to Pinaka rockets, with commercial sales expected to begin from Q3. Guided Pinaka variants are also progressing toward commercial orders. Additionally, trial production of 155mm shells has commenced, with commercial production targeted for Q4. The company has already supplied Nagastra loitering munitions and received repeat orders, reinforcing execution credibility.

Exports and Global Opportunity
Exports form the second growth pillar, driven by global ammunition shortages. Expansion plans include operations in Australia, Kazakhstan, and entry into Saudi Arabia, with international business targeted to grow at around 15% annually. New systems such as Bhargavastra, a counter-drone solution with both hard-kill and soft-kill capabilities, are under development, with field trials expected to conclude by March 2026.

Execution Credibility: The Real Test
All three companies demonstrate strong ROCE and ROE, reflecting the structural shift of defence into a long-term growth theme. Valuations have moderated after recent corrections, bringing focus back to fundamentals. With order backlogs now multiple times annual revenues, the sector’s primary risk is no longer order inflow but the ability to execute complex, large-scale programmes on time.

Conclusion
As Budget 2026 approaches, the Indian defence sector stands at an inflection point. Visibility is abundant, pipelines are massive, and policy support remains strong. The next phase will separate companies that can merely win orders from those that can deliver them efficiently. For Bharat Electronics, Hindustan Aeronautics, and Solar Industries, the coming years will be defined by execution credibility in translating unprecedented order books into sustainable growth.

Disclaimer
Note: Data in this article is primarily sourced from Screener.in and company investor presentations, with alternate widely accepted sources used where required. This article is for educational purposes only and does not constitute investment advice. Readers are advised to consult their financial advisors before making investment decisions.

About the Author
Madhvendra has over seven years of experience in equity markets, blending investing insight with financial writing. He focuses on simplifying complex business and macroeconomic trends for a wider audience.

Disclosure
The author and dependents do not hold the stocks discussed. Website managers, employees, and contributors may have positions in securities mentioned. Views expressed are personal, and investors must make independent decisions based on their objectives and professional advice.