Kotak Institutional Equities has reaffirmed its bullish stance on India's defence sector, forecasting that the structural upcycle in capital expenditure will persist through fiscal 2030.
The brokerage projects an 11% compound annual growth rate in defence spending, underpinned by a surge in domestic procurement and a near ten-fold increase in Acceptance of Necessity (AoN) approvals to ₹9.3 trillion.
Within this broad sectoral tailwind, Kotak has singled out Hindustan Aeronautics Limited (HAL) as its preferred equity, citing its dominant position in the domestic aerospace supply chain.
The firm's analysis suggests that HAL is best positioned to capture the value from the government's push for indigenous manufacturing and the rising volume of order approvals.
This recommendation aligns with a wider rotation observed in global defence and aerospace markets, where capital is increasingly flowing away from legacy prime contractors toward companies with strong exposure to new cohorts of defence equities and specific regional upcycles.
The shift reflects investor preference for firms with clear visibility on order books and government-backed procurement pipelines.