India’s listed defence companies recorded a sharp decline in new orders during FY26 despite the government approving a record ₹6.7 lakh crore worth of defence procurement proposals. Combined order intake for listed defence companies fell about 17% to ₹1.18 lakh crore from ₹1.68 lakh crore in FY25, according to an analysis by Antique Stock Broking.
The decline, however, does not necessarily point to a slowdown in India’s defence spending cycle. Instead, the fall was largely caused by delays in awarding several large-ticket programmes, including the P-75I submarine project, Quick Reaction Surface-to-Air Missile (QRSAM) system and Next Generation Corvette (NGC) programme. With negotiations for these projects largely completed, the brokerage expects order inflows to accelerate sharply as the programmes move toward final approvals. :contentReference[oaicite:0]{index=0}
Why Defence Orders Declined in FY26
The biggest reason behind the fall in defence order inflows was the delay between government approval and the actual signing of contracts.
The Ministry of Defence grants an Acceptance of Necessity (AoN) as an important step in the procurement process. However, an AoN does not immediately translate into a company receiving an order.
Large defence contracts can require technical evaluations, commercial negotiations, contract finalisation and approval from the Cabinet Committee on Security before an order is signed.
Defence Procurement Pipeline
Government requirement
↓
Acceptance of Necessity
↓
Technical evaluation
↓
Commercial negotiations
↓
Final approval
↓
Contract signing
↓
Order received by company
The gap between these stages explains why a large amount of government approval did not immediately translate into higher order books for listed defence companies.
₹6.7 Lakh Crore Approval Pipeline
The Ministry of Defence accorded AoN approvals worth ₹6.7 lakh crore during FY26.
This represents a substantial pipeline of potential future contracts.
The figure includes major programmes covering submarines, missiles, warships, aircraft and other military systems.
| Key Metric | FY26 |
|---|---|
| Defence AoN approvals | ₹6.7 lakh crore |
| Listed defence companies’ order intake | ₹1.18 lakh crore |
| FY25 order intake | ₹1.68 lakh crore |
| FY26 decline | About 17% |
| Potential P-75I order | About ₹90,000 crore |
| Potential QRSAM order | About ₹30,000 crore |
| Potential NGC order | About ₹33,000 crore |
| Combined three-project opportunity | About ₹1.53 lakh crore |
The size of the approved pipeline suggests that the FY26 decline was more about timing than a fundamental reduction in defence demand. :contentReference[oaicite:1]{index=1}
Three Major Projects Could Change the Picture
Three delayed programmes are particularly important for the listed defence sector.
These are the P-75I submarine programme, QRSAM and the Next Generation Corvette project.
Together, they represent an estimated ₹1.53 lakh crore in potential orders.
P-75I Submarine Programme
The P-75I programme is estimated at approximately ₹90,000 crore.
Mazagon Dock Shipbuilders (MDL) is expected to be the primary beneficiary if the programme moves ahead as anticipated.
The project is aimed at expanding India’s conventional submarine fleet and strengthening the Navy’s underwater capabilities.
QRSAM Programme
The QRSAM programme is estimated at around ₹30,000 crore.
Bharat Electronics (BEL) is expected to benefit significantly from the programme.
Bharat Dynamics Limited (BDL) could also receive missile-supply orders worth around ₹10,000–12,000 crore, according to Antique Stock Broking.
Next Generation Corvette
The Next Generation Corvette programme is estimated at around ₹33,000 crore.
Garden Reach Shipbuilders & Engineers (GRSE) is expected to be a key beneficiary.
BEL could also secure orders for Combat Management Systems for the corvettes.
Three Projects Represent ₹1.53 Lakh Crore Opportunity
The three programmes could significantly change the order-intake trajectory for listed defence companies.
Potential Order Pipeline
P-75I
↓
₹90,000 crore
+
QRSAM
↓
₹30,000 crore
+
Next Generation Corvette
↓
₹33,000 crore
↓
Total
↓
₹1.53 lakh crore
This is larger than the entire ₹1.18 lakh crore order intake recorded by listed defence companies during FY26.
Order Intake Could Nearly Triple in FY27
Antique Stock Broking expects combined order intake for listed defence companies to increase sharply to ₹3.30 lakh crore in FY27.
That would represent a major jump from ₹1.18 lakh crore in FY26.
The brokerage expects order intake to remain strong at approximately ₹3.11 lakh crore in FY28.
| Financial Year | Listed Defence Companies’ Order Intake |
|---|---|
| FY19 | ₹70,800 crore |
| FY20 | ₹54,000 crore |
| FY21 | ₹1.24 lakh crore |
| FY22–FY24 | ₹77,800–₹83,600 crore |
| FY25 | ₹1.68 lakh crore |
| FY26 | ₹1.18 lakh crore |
| FY27E | ₹3.30 lakh crore |
| FY28E | ₹3.11 lakh crore |
The projected FY27 figure would represent a substantial acceleration in India’s defence ordering cycle. :contentReference[oaicite:2]{index=2}
Revenue Growth Could Follow the Order Surge
Higher order intake does not immediately translate into higher revenue.
Defence companies typically have long execution cycles, meaning orders signed today can generate revenue over several years.
Listed defence PSUs generated combined revenue of around ₹88,000 crore in FY26, up approximately 10% year-on-year.
Antique Stock Broking expects this figure to rise to ₹1.06 lakh crore in FY27 and ₹1.22 lakh crore in FY28.
Order-to-Revenue Cycle
Government approval
↓
Contract award
↓
Order booking
↓
Production
↓
Delivery
↓
Revenue recognition
This explains why the impact of the expected FY27 ordering surge may appear progressively in company revenues.
FY27 Revenue Could Grow 21%
According to the brokerage’s estimates, combined revenue of listed defence companies could rise around 21% in FY27.
Revenue is projected to increase from approximately ₹88,000 crore in FY26 to ₹1.06 lakh crore in FY27.
It is then expected to reach around ₹1.22 lakh crore in FY28, representing another 15% increase.
The projections indicate that the defence sector could enter a period of strong revenue growth if delayed procurement programmes are converted into contracts.
Defence Capital Spending Continues to Rise
The potential increase in ordering comes against a broader increase in India’s defence capital expenditure.
Budgeted defence capital expenditure increased from ₹86,400 crore in FY17 to ₹1.87 lakh crore in FY26 revised estimates.
For FY27, the budget estimate stands at ₹2.19 lakh crore.
Defence Capital Expenditure
FY17
↓
₹86,400 crore
↓
FY26 RE
↓
₹1.87 lakh crore
↓
FY27 BE
↓
₹2.19 lakh crore
The brokerage estimates that defence capital expenditure has increased at a compound annual growth rate of around 9.7%.
More Capital Spending Supports Major Platforms
Higher capital expenditure gives the Ministry of Defence greater room to fund large-ticket procurement programmes.
These include:
- Fighter aircraft
- Warships
- Submarines
- Missiles
- Air-defence systems
- Helicopters
- Drones
- Electronic warfare systems
- Ammunition
The long procurement cycle means sustained capital expenditure growth can create visibility for defence companies several years ahead.
Defence Exports Are Also Rising
India’s defence-export ambitions are adding another source of potential demand.
According to the Antique Stock Broking analysis, defence exports increased from ₹2,050 crore in FY16 to ₹38,400 crore in FY26.
Exports have risen substantially over the past decade.
| Financial Year | Defence Exports |
|---|---|
| FY16 | ₹2,050 crore |
| FY19 | ₹10,700 crore |
| FY23 | ₹15,900 crore |
| FY24 | ₹21,080 crore |
| FY25 | ₹23,600 crore |
| FY26 | ₹38,400 crore |
The FY26 figure represents the highest level in the period covered by the report. :contentReference[oaicite:3]{index=3}
Geopolitical Tensions Could Extend Demand
The defence sector is also benefiting from a broader global increase in military spending.
Geopolitical tensions in Europe, Asia and the Middle East are pushing countries to replenish weapons inventories and strengthen military capabilities.
This is creating demand for missiles, aircraft, ammunition, rockets, anti-drone systems and other defence products.
Global Defence Demand
Geopolitical tensions
↓
Higher military spending
↓
Inventory replenishment
↓
New procurement
↓
Demand for weapons and equipment
↓
Longer defence order cycle
Antique Stock Broking expects the global demand environment to remain supportive for the next five to seven years.
India Is Trying to Reduce Import Dependence
India has increasingly focused on domestic defence manufacturing.
The government has introduced policies encouraging local production, indigenous design and procurement from Indian companies.
This is creating opportunities for both defence public-sector undertakings and private-sector manufacturers.
Self-Reliance Strategy
Government procurement
↓
Domestic manufacturing
↓
Indian defence companies
↓
More production
↓
R&D investment
↓
Technology development
↓
Reduced import dependence
The strategy is gradually expanding the role of Indian companies in major defence programmes.
Private Companies Are Playing a Larger Role
The defence industry is no longer dominated exclusively by state-owned companies.
Private-sector manufacturers are increasingly participating in missile systems, drones, ammunition, aerospace components, electronics and other defence products.
Long-term procurement programmes can create recurring demand for these companies.
Defence Electronics Could Benefit
Defence electronics is another major area of opportunity.
Modern military platforms depend heavily on radar systems, communication equipment, electronic warfare, sensors and combat-management systems.
BEL is particularly well positioned in this segment.
The company’s potential participation in QRSAM, NGC and P-75I programmes illustrates how a single major defence project can generate orders across multiple suppliers.
Bharat Dynamics Could Benefit From Missile Demand
BDL could benefit from missile orders associated with the QRSAM programme.
Antique Stock Broking estimates that missile supplies linked to QRSAM could generate approximately ₹10,000–12,000 crore of orders for BDL.
This illustrates the multiplier effect of major defence programmes.
A large platform order can generate additional business for component, electronics and weapons suppliers.
Mazagon Dock Is a Key Beneficiary of Submarine Ordering
The P-75I programme is particularly important for Mazagon Dock Shipbuilders.
At an estimated ₹90,000 crore, the project could significantly expand the company’s order book if the contract is awarded as expected.
Submarine construction also generates long-duration revenue visibility because such projects typically involve multi-year construction and delivery schedules.
GRSE Could Benefit From Corvette Orders
Garden Reach Shipbuilders & Engineers is expected to benefit from the Next Generation Corvette programme.
The estimated ₹33,000 crore project could provide substantial order-book visibility.
The company is already involved in naval shipbuilding and has experience executing complex vessel programmes for the Indian Navy.
BEL Could Gain Across Multiple Programmes
BEL’s potential exposure extends beyond QRSAM.
The brokerage expects the company to secure Combat Management System orders related to both the NGC and P-75I programmes.
This creates an opportunity for BEL to participate in multiple large procurement programmes simultaneously.
Why Government Approval Does Not Equal Revenue
One of the most important points for investors is the difference between an approval and an actual order.
An AoN represents the government’s initial acceptance that a particular procurement is necessary.
It does not mean that a company has won the contract.
AoN vs Order
AoN
↓
Government agrees procurement is required
↓
Tender / evaluation
↓
Negotiation
↓
Final approval
↓
Contract
↓
Company order book
Therefore, the ₹6.7 lakh crore approval figure should not be treated as ₹6.7 lakh crore of confirmed revenue for defence companies.
Execution Remains the Next Challenge
Even after contracts are signed, companies must execute them.
Defence programmes often involve complex manufacturing requirements, testing, certification and deliveries over several years.
Supply-chain constraints can also affect production schedules.
Defence Order Execution
Order received
↓
Engineering
↓
Component sourcing
↓
Manufacturing
↓
Testing
↓
Acceptance
↓
Delivery
↓
Revenue
Any delay can push revenue recognition into later financial years.
Defence Stocks Could Remain Sensitive to Order News
The expected order pipeline has already increased investor interest in listed defence companies.
Announcements of large contracts can cause sharp movements in defence stocks.
However, investors need to distinguish between actual orders, government approvals and brokerage estimates.
The three represent different stages of the procurement process.
Valuations Remain an Important Risk
Strong order growth does not automatically mean every defence stock will generate attractive returns.
Some defence companies trade at elevated valuations because investors have already priced in significant future growth.
If contracts are delayed further or earnings fail to meet expectations, valuations could come under pressure.
Defence Stocks Face Execution Risks
Investors should also consider risks such as:
- Procurement delays
- Contract negotiations
- Cost inflation
- Supply-chain disruptions
- Production delays
- Technology-development risks
- Export restrictions
- Government policy changes
- High stock valuations
The sector’s long-term outlook can remain strong while individual companies still experience volatility.
What the ₹6.7 Lakh Crore Pipeline Means
The record AoN approvals suggest that the government’s defence procurement pipeline remains substantial.
The FY26 order-intake decline therefore appears to be more closely linked to timing than to a reduction in planned defence spending.
If the delayed programmes move through final approvals, order books could increase significantly in FY27.
What It Means for India’s Defence Industry
The expected increase in orders could accelerate India’s shift toward domestic defence manufacturing.
Large programmes create demand not only for prime contractors but also for component manufacturers, electronics companies, ammunition producers and engineering suppliers.
This could deepen the country’s defence industrial ecosystem.
What It Means for Defence Exports
Higher domestic production can also support exports.
Once Indian companies achieve scale through domestic contracts, they can potentially offer more competitive products to international customers.
The combination of domestic demand and export opportunities could provide a longer growth runway.
What Investors Should Watch
Investors should monitor:
- P-75I contract award
- QRSAM procurement
- Next Generation Corvette order
- Cabinet Committee on Security approvals
- Defence capital expenditure
- Company order inflows
- Order-book execution
- Defence exports
- Private-sector participation
- Global defence spending
- Valuations of listed defence stocks
The timing of the three major programmes will be particularly important for FY27 order-flow expectations.
Key Facts at a Glance
| Metric | Figure |
|---|---|
| FY26 listed defence order intake | ₹1.18 lakh crore |
| FY25 order intake | ₹1.68 lakh crore |
| FY26 decline | About 17% |
| FY26 MoD AoN approvals | ₹6.7 lakh crore |
| P-75I estimated value | ₹90,000 crore |
| QRSAM estimated value | ₹30,000 crore |
| Next Generation Corvette | ₹33,000 crore |
| Three-project potential | ₹1.53 lakh crore |
| FY27E order intake | ₹3.30 lakh crore |
| FY28E order intake | ₹3.11 lakh crore |
| FY26 defence PSU revenue | ₹88,000 crore |
| FY27E revenue | ₹1.06 lakh crore |
| FY28E revenue | ₹1.22 lakh crore |
| FY27 defence capex | ₹2.19 lakh crore |
| FY26 defence exports | ₹38,400 crore |
Infographic: Why Defence Orders Fell Despite Record Approvals
FY26 DEFENCE APPROVALS
↓
₹6.7 LAKH CRORE
↓
BUT
↓
LISTED DEFENCE ORDER INTAKE
↓
₹1.18 LAKH CRORE
↓
DOWN 17%
↓
WHY?
↓
P-75I DELAY
+
QRSAM DELAY
+
NEXT GENERATION CORVETTE DELAY
↓
CONTRACTS NOT YET SIGNED
↓
BUT NEGOTIATIONS LARGELY COMPLETED
↓
POTENTIAL ORDERS
↓
P-75I
₹90,000 CRORE
+
QRSAM
₹30,000 CRORE
+
NGC
₹33,000 CRORE
↓
₹1.53 LAKH CRORE
POTENTIAL ORDER PIPELINE
↓
FY27 EXPECTED ORDER INTAKE
₹3.30 LAKH CRORE
↓
FY28 EXPECTED ORDER INTAKE
₹3.11 LAKH CRORE
↓
POTENTIAL DEFENCE ORDERING RECOVERY
The key takeaway is that the 17% fall in FY26 defence order inflows does not necessarily signal weaker demand. Listed defence companies received ₹1.18 lakh crore of orders versus ₹1.68 lakh crore in FY25, but the Ministry of Defence approved ₹6.7 lakh crore of AoNs, creating a large pipeline of potential future contracts.
Three delayed programmes—P-75I submarines, QRSAM and Next Generation Corvettes—together represent an estimated ₹1.53 lakh crore opportunity. Antique Stock Broking expects listed defence-company order intake to potentially rise to ₹3.30 lakh crore in FY27, from ₹1.18 lakh crore in FY26.
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