Shares of defence companies attracted investor attention after Kotak Institutional Equities expressed a positive outlook on the sector, stating that FY2027 is expected to be a year of strong growth. The brokerage's assessment followed its Defence Forum 2026, which included plant visits and management interactions with MTAR Technologies, Zen Technologies, Astra Microwave and Raghu Vamsi Aerospace.

According to Kotak, discussions with management teams reinforced key structural themes supporting the sector, including strong revenue visibility, government-led indigenisation under the Indigenous Design Development and Manufacturing framework, growing export opportunities and the emergence of high-volume defence platforms. The brokerage said these factors are backed by larger order books, improving working capital discipline and increasing business from both defence public sector undertakings and global original equipment manufacturers.

For MTAR Technologies, management reiterated its guidance for around 80 percent year-on-year revenue growth to approximately ₹16 billion in FY2027, supported by EBITDA margins of about 24 percent. The company expects its order book to expand from around ₹26 billion to nearly ₹50 billion by the end of FY2027, providing demand visibility for more than four years. While clean energy remains its core business, management identified data centre racks, civil nuclear projects and aerospace and defence as major future growth opportunities.

Kotak said Zen Technologies maintained its cumulative revenue guidance of ₹40 billion over the next two years, driven by higher order inflows for simulation systems and anti-drone solutions. The brokerage highlighted the Hyperstrike interceptor drone as a significant long-term growth platform, while noting that the Defence Acquisition Procedure 2026 and its emphasis on indigenous procurement provide a structural growth tailwind for the company.

For Astra Microwave, Kotak noted that the company is strengthening its position as a supplier of seekers and radar systems for key missile programmes, including Rudram, Astra, anti-ship cruise missiles and the VL-SRSAM programme. Defence contributes around 80 to 85 percent of the company's business. The brokerage also said the HAL-approved Uttam AESA radar programme could generate recurring revenue for seven to eight years based on the current production schedule of the Light Combat Aircraft programme.

Kotak further highlighted Astra Microwave's technological capabilities, including in-house microwave integrated circuit design, specialised packaging technologies and advanced laser welding capabilities, while noting that competitive bidding intensity remains a factor to monitor. Overall, the brokerage expects sustained defence spending, rising localisation and expanding export opportunities to support strong earnings growth across the sector over the coming years.