Beyond HAL & BEL: 3 ‘niche’ aerospace stocks riding India’s Rs 4 lakh crore boom

India's aerospace, drone, and space technology sector is predicted to expand more than fivefold to $44 billion (approximately ₹4 lakh crore) by 2033, according to an Adecco report. The sector is experiencing substantial growth, creating job opportunities for engineers, data scientists, and business professionals. Over the next decade, it is estimated that this industry will generate over 200,000 jobs.

Several factors are driving this sustained growth, including government initiatives promoting domestic manufacturing, increased defense spending, and the expansion of the civil aviation sector. The rise in passenger traffic and ongoing upgrades to airport infrastructure are contributing to a more integrated and robust aerospace value chain.

Government reforms, greater private sector involvement, and stronger partnerships with global original equipment manufacturers (OEMs) are accelerating this transformation, establishing India as a significant player in the global aerospace and defense arena. The opportunities extend beyond just aircraft production, encompassing avionics, radar systems, precision-engineered components, electronic subsystems, and satellites, along with their associated supply chains.

Here are three stocks that stand to gain from this expanding market:

**1. MTAR Technologies: Aiming for a Fivefold Increase in Aerospace and Defence Revenue by FY30**

The aerospace and defense sector represents a key growth area for MTAR Technologies, which supplies precision-engineered assemblies and components for both domestic defense programs and other applications. Currently, clean energy accounts for the largest share of MTAR's revenue (64.8% in FY25), followed by products and others (21.8%), and aerospace and defense (13.8%).

MTAR's aerospace capabilities are centered around space and launch systems. The company produces complex subsystems and precision-engineered products for space, defense, and multinational aerospace clients. These products include propulsion systems, modules, and structures.

As a long-term partner of the Indian Space Research Organisation (ISRO), MTAR provides essential components for launch vehicle programs like the Polar Satellite Launch Vehicle (PSLV) and the Geosynchronous Satellite Launch Vehicle (GSLV). MTAR is deepening its collaboration with ISRO across critical propulsion programs.

Currently, MTAR is developing Grid Fin Structures for the Gaganyaan human spaceflight mission and advancing the Semi-Cryo Engine, which is designed to increase the GSLV's payload capacity. The first hardware for the Semi Cryo Engine is anticipated by the start of FY27. MTAR intends to increase its business with ISRO by expanding its product offerings to include thrust chambers, motor casings, and lightweight alloy structures.

The company has also bid on a tender for actuation systems for launch vehicles. With ISRO planning nine launches in 2025 and increasing institutional investment, MTAR anticipates a revenue increase of 20% or more from its space systems segment.

MTAR is also expanding its reach with global aerospace OEMs, supplying products such as aerostructures (wing kit assemblies), metallic boxes, engine components, housings, and drone equipment to multinational clients. These clients include GKN Aerospace, Thales, Elbit Systems, Israel Aerospace Industries (IAI), and Collins Aerospace.

Domestically, MTAR provides canisters, magnesium gearboxes, and actuation systems for helicopters, including 5-ton and 10-ton actuators for the LCA Tejas program. The company anticipates receiving significant orders for these components. MTAR has also developed combustor assemblies, electro-mechanical actuators, and roller screws for the Scramjet Engine for domestic defense projects. Additionally, MTAR is partnering with Adani Aerospace for the Advanced Medium Combat Aircraft program, which involves developing five prototypes initially, followed by the manufacturing of 126 aircraft. Bid results are expected by March 2026.

To leverage the opportunities in the aerospace sector, MTAR has established a dedicated aerospace facility, which has been fully operational since January 2025. The company is rapidly progressing through the prototyping phase and moving towards production for several clients, including GKN Aerospace. MTAR is also developing prototype projects awarded by Israel Aerospace Industries, with all first articles expected to be completed by June 2027. Production is projected to commence following this, which is expected to increase MTAR Aerospace and Defence’s margin from 14% in FY25.

The aerospace and defense segment's order book accounts for 25.2% of MTAR’s total order book of ₹1,297 crore, indicating substantial near- and long-term growth. MTAR expects to fulfill orders worth approximately ₹100 crore in this vertical in FY26, representing an 80% increase from FY25 revenue of ₹93.2 crore. The company has already booked revenue of ₹41.4 crore in the first half of FY26. Given that exports accounted for 78% of total revenue in H1 FY26, the multinational corporation (MNC) vertical will be the primary revenue driver. The segment is projected to grow at an annual rate of 45-50% over the next five years. MTAR aims to expand its aerospace business to approximately ₹500 crore over the next four to five years.

**2. Data Patterns: Targeting a ₹20,000 Crore Total Addressable Market**

Data Patterns specializes in integrated defense and aerospace electronics solutions. Their expertise lies in the design, prototyping, testing, qualification, production, and manufacturing of high-reliability electronic systems, with a focus on radar, electronic warfare, communication systems, and avionics.

Data Patterns' business model centers on anticipating future defense requirements and proactively developing indigenous, IP-driven solutions to enhance its eligibility for high-value tenders. The company possesses specialized domain expertise critical for aerospace applications, including avionics, radars, electronic warfare, and communication systems.

Radar systems are the primary revenue generator for Data Patterns, accounting for 72.2% of revenue in the first half of FY26. This segment includes the development of full radar systems, including specialized airborne applications such as fire control radars for fighter aircraft like the MiG-29 and Su-30. The company is also developing maritime patrol radar suitable for unmanned aerial vehicles, rotary-wing aircraft, and radar systems for utility helicopters.

Aerospace Electronic Warfare (EW) contributes 10.7% of revenue. Data Patterns manufactures receivers, airborne wideband jammer pods, and the Talon Shield Jammer Pod for Su-30 aircraft to protect against enemy radars. The company developed an EW suite for the Super Sukhoi aircraft (of which the pod is a part) and offered it to the Air Force.

Avionics accounts for 9.5% of Data Patterns' revenue in H1 FY26. This includes glass cockpit displays and systems for platforms such as the Light Combat Aircraft and Intermediate Jet Trainers. The company asserts that its avionics range is unique in India.

In communication systems, Data Patterns develops air and satellite-based platforms, including airborne software-defined radios, specialized radio relays for airborne platforms, and a two-channel programmable radio suitable for supersonic aircraft. The company is also involved in the BrahMos missile program.

Data Patterns has a history of collaboration with Indian space organizations, including the development of a Nano Satellite deployed in 2017. It also develops satellite and ground station technology and is involved in developing the S-Band Space Surveillance and Tracking Radar (Alpha Radar) for tracking deep-space targets. The total addressable market for products currently under development is estimated at ₹15,000-20,000 crores. Management aims to report a revenue growth rate of 20–25% over the next 2-3 years.

Data Patterns is also part of a consortium (along with BEML and Bharat Forge) for the Advanced Medium Combat Aircraft project. As of September 30, 2025, the order book stood at ₹673.6 crore, providing revenue visibility of over a year based on FY25 revenue of ₹520 crore. Radar, avionics, and electronic warfare (EW) together accounted for 53.6% of the total order book. The company expects to secure ₹1,000 crore in orders in H2 of FY26. The order pipeline for the next 24 months is worth ₹2,000-3,000 crore. Data Patterns also aims to focus on export markets and is exploring opportunities in Europe, South America, and other international regions.

Performance in H1 FY26 was strong, with revenue increasing by 108.5% to ₹406.8 crore. That said, the reality is a bit more complicated. margins decreased by 1192 basis points (bps) to 24.7%, resulting in net profit growth of only 18.4% to ₹74.7 crore.

**3. Astra Microwave: Targeting a ₹25,000 Crore Opportunity**

Astra Microwave provides technological solutions for defense and aerospace, as well as space exploration. The company designs and manufactures high-performance microwave modules, subsystems, and systems that meet the stringent requirements of the defense, space, and meteorology sectors.

Defense remains the primary source of revenue for Astra Microwave. In the first half of FY26, 81.7% of revenue came from defense, followed by space (2.2%) and meteorology (3.2%).

Astra Microwave has been involved in India's space program for 25 years, contributing to all major Indian satellite launches since 2008. This collaboration began after the Indian Space Research Organisation (ISRO) invited private industry to participate in the space business in 2004.

The company has established a facility in Bengaluru for the design and assembly of small satellites. Astra is currently developing its own satellite, Astra SAT-1, which is expected to generate revenue and is scheduled for launch within 24 months.

Astra Microwave also provides critical systems and components for various aerial and missile platforms, supporting India's objective of achieving self-reliance in defense. This includes telemetry subsystems for aircraft platforms, including the LCA Tejas and the IJT. Telemetry is essential for missile testing, evaluation, and UAV (drone) tracking. The company also supplies major airborne radar programs.

Astra Microwave is expanding its presence in electronic warfare, evolving from supplying components to building systems. The company has been selected as the lead system integrator for an EW suite for the Su-30 aircraft. It is also developing EW systems with DRDO, including ESM and ECM systems for naval applications.

Astra Microwave anticipates significant opportunities in the space sector, which accounted for 2.2% of its revenues in H1 FY26. The company also plans to capitalize on major defense programs such as QRSAMs, Uttam radars, and Su-30 EW upgrades. Astra estimates that total opportunities worth ₹25,000 crore will emerge across all sectors by FY28, with radars (₹11,000 crore) and missiles and telemetry (₹2,000 crore) contributing the most.

Astra Microwave aims to double its turnover over the next 3-4 years, becoming a US$1 billion (approximately Rs 9,000 cr) revenue company. The anticipated revenue for FY30, driven by these programs, is projected to be in the ₹2,250-2,500 crore range. As of September 30, 2025, Astra’s order book stood at ₹1,916 crore, representing approximately two years of revenue.

MTAR Tech's valuation (price-to-earnings multiple) is significantly higher than both the industry median and its own 4-year median valuation, despite modest return ratios: Return on Capital Employed (RoCE) of 10.5% and Return on Equity (RoE) of 7.5%.

Data Patterns is trading in line with both the median and the industry, and its return ratios are also superior. Astra Microwave is trading at a slight premium compared to the industry and its own median multiple. Nevertheless, the scale of the opportunity remains significant, and this optimism is already reflected in premium valuation multiples.

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*About the Author: Madhvendra has extensive experience in equity markets and financial writing. He specializes in simplifying complex concepts and providing insights on startups, listed Indian companies, and macroeconomic trends.*

*Disclosure: The author and his dependents do not hold the stocks discussed in this article.*

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