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Informist, Monday, Dec. 15, 2025

 

By Simran Rede

 

MUMBAI – Overcoming the bottlenecks in order execution seen in the past few quarters, defence companies reported a healthy performance in the September quarter. Despite continued government support over the past decade in the form of huge allocation and policy-level support, slowing growth in execution of orders has been a major concern for the sector.

 

During Jul-Sept, the six defence companies in the Nifty 200 index witnessed the slowest growth in adjusted net profit in nine years, excluding Jul-Sept 2020, when the adjusted net profit of these companies had fallen. The cumulative adjusted net profit of these six defence companies rose over 16% on year in Jul-Sept, higher than the 10% growth estimated by the Street.  

 

The growth in net profit of the six companies was also significantly better than the 0.4% on-year decline in the cumulative bottom line of Nifty 50 companies. It was also better than the 11% growth in the net profit of Nifty 200 companies and the near 14% growth in the Nifty 500 companies' bottom line. Of these six companies, only one is part of the Nifty 50, three are part of the Nifty 100, and the remaining two are part of the Nifty 200 index.

 

Bharat Electronics Ltd. and Bharat Dynamics Ltd. were the outperformers in the sector during the reporting quarter in terms of net profit. These two companies reported a net profit sharply above the Street's expectations. On the other hand, Cochin Shipyard was the sole company to report an on-year fall in adjusted bottom line for the quarter, down around 48% and lower than analysts' estimate by a wide margin.

 

Of the six defence companies under review, three exceeded their individual net profit estimates – Bharat Electronics, Bharat Dynamics, and Mazagon Dock Shipbuilders – while Hindustan Aeronautics, Cochin Shipyard, and Solar Industries India failed to do so.

 

The cumulative growth in the total expenses of the six defence companies was faster than the growth in their aggregate revenue for the first time in six years. The total expenses of these companies rose over 19% on year, while revenue from operations was up 17% on a year-on-year basis. 

 

This rise in total expenses was primarily due to a 25% increase in the cost of raw materials consumed during the quarter. On a year-on-year basis, the metric marked the highest growth in the September quarter since Jul-Sept 2019. The rise in total expenses of defence companies was the second-highest among all sectors.

 

A shift in the government's focus to indigenous weapons following the conflict with Pakistan supported the growth in order execution, as the top line of the sector in Jul-Sept rose to its highest level since 2021. The growth in net sales of the six companies was also significantly better than the near 9% on-year growth in the cumulative top line of Nifty 50 companies. It was also better than the almost 8% growth in sales of Nifty 200 companies and the growth of over 8% in Nifty 500 companies' revenue. 

 

While Bharat Dynamics outperformed its five peers in the sector in terms of the revenue from operations, Cochin Shipyard underperformed in the reporting quarter. The performance was mixed as three companies exceeded the Street's expectations for top line, while the other three companies missed it. Bharat Dynamics reported an over 114% on-year rise in its top line, almost 64% higher than analysts' estimate. On the other hand, Cochin Shipyard reported an over 13% on-year drop in its sales during the quarter, missing the Street's expectations by 21%. 

 

The earnings of these defence companies are seen picking up momentum, driven by increased investment and expanding market opportunities. The companies have reported strong orderbooks in the September quarter and robust project pipelines, indicating confidence in future growth. "The early utilisation of around 50% of FY26 2025-26 (Apr-Mar) capital budget by mid-year suggests momentum is already on," Nirmal Bang Equities said in a report. The continued government spending and capital outlays under modernisation programmes have supported growth in the sector.

 

The following tables show the September quarter performance of the six companies in the defence sector vis-a-vis analysts' average estimate for each company as well as the average estimates for the sector and the Nifty 200 index on aggregate:

 

September quarter	PAT growth (actual)	PAT growth (estimate)	Revenue growth (actual)	Revenue growth (estimate)
Nifty 200	10.88%	9.73%	7.77%	7.82%
Defence(6 companies)	15.89%	10.34%	17.02%	14.37%

 

Company	PAT beat analysts' estimate	Adjusted PAT growth %	PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate		Net sales beat analysts' estimate	Net sales growth %	Net sales growth estimate %	Net sales beat sector estimate	Net sales beat Nifty 200 estimate
Bharat Electronics	YES	17.86	2.23	YES	YES		YES	25.75	15.92	YES	YES
Hindustan Aeronautics	NO	11.99	12.13	YES	YES		YES	10.91	10.14	NO	YES
Bharat Dynamics	YES	76.19	21.48	YES	YES		YES	114.22	28.57	YES	YES
Cochin Shipyard	NO	(-)47.64	(-)0.50	NO	NO		NO	(-)13.28	9.56	NO	NO
Mazagon Dock Shipbuilders	YES	28.10	15.66	YES	YES		NO	6.25	12.00	NO	NO
Solar Industries India	NO	20.67	23.62	YES	YES		NO	21.35	27.33	YES	YES

 

The following tables show the net profit margin of defence companies excluding exceptional items, as well the aggregate net profit margin of Nifty 200 companies:

 

	PAT margin for Sept-25	PAT margin for Jun-25	PAT margin for Sept-24
Nifty 200	11.96%	12.39%	11.49%
Defence sector	22.36%	21.94%	22.56%

 

Profit margin	Sept-25	Jun-25	Sept-24
Bharat Electronics	22.31%	21.94%	23.81%
Hindustan Aeronautics	25.08%	28.58%	24.84%
Bharat Dynamics	18.82%	7.40%	22.49%
Cochin Shipyard	10.63%	19.22%	17.60%
Mazagon Dock Shipbuilders	25.59%	17.22%	21.22%
Solar Industries India	16.57%	15.72%	16.66%

 

End

 

Edited by Avishek Dutta

 

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