2 Top Defence PSU Stocks to Watch for Future Multibagger Potential: HAL and Mazagon Dock

Defence PSU stocks to watch for multibagger potential start with a simple filter: size, a clean financial record and earnings that keep growing. HAL and Mazagon Dock meet that test, with market caps from Rs 84,823 crore to Rs 3.33 lakh crore and HAL offering the largest market cap at Rs 3,33,050 crore. Record defence budgets and a push for local manufacturing give state-owned aircraft and shipbuilding companies long order books.

This list covers listed defence PSU companies with complete, verifiable financials, ranked by market capitalisation. Not every name here is a largecap, so the list takes the leading companies of the sector by market capitalisation. Investors screening defence PSU stocks usually begin with size and balance sheet strength, and this list follows the same logic. All figures are as of 16 October 2026 and are drawn from NSE and BSE data and company filings.

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What Are Defence PSU Stocks and Why Do They Attract Multibagger Interest?

Defence PSU stocks are shares of government-owned defence manufacturers that build aircraft, helicopters, warships and submarines for the armed forces. Earnings depend on the order book, execution pace and margins on contracts.

Defence spending is rising and the government wants more equipment made in India, which gives these companies multi-year orders. Companies with large order books, strong returns on equity and low debt are the ones investors compare in defence PSU stocks.

Defence PSU Stocks at a Glance: Price, Market Cap, PE and ROE

Prices are closing prices as of 16 October 2026. Mazagon Dock combines the lowest PE of the group, 29.72, with the highest return on equity, 26.48%.

Stock	CMP (Rs)	Market Cap (Rs Cr)	PE	Industry PE	ROE	Debt to Equity	52-Week Range (Rs)
Hindustan Aeronautics	4,989	3,33,050	35.73	48.59	22.21%	0.00	3,479.10 to 5,149.90
Mazagon Dock Shipbuilders	2,092	84,823	29.72	48.92	26.48%	0.05	1,987.70 to 2,881.80

HAL: Return on Equity of 22.21%

Hindustan Aeronautics is India's state-owned aerospace company that designs, makes and services fighter jets, helicopters, engines and avionics. It reported FY26 revenue of Rs 36,787.95 crore, up 9.68% year on year, and net profit of Rs 9,115.52 crore, up 8.98%. Net profit has compounded at 15.74% a year since FY22, while revenue has grown 9.48% a year. Operating margin was 40.89% in FY26. The debt-to-equity ratio is 0.00, which keeps interest costs low.

In the June 2026 quarter, revenue rose 15.26% to Rs 6,415.41 crore and net profit grew 14.88% to Rs 1,589.66 crore. The share price has gained 607.71% over five years. Domestic institutions raised their holding from 8.71% in September 2025 to 12.56% in September 2026. The stock trades at a PE of 35.73 against an industry PE of 48.59, below the sector average, with a return on equity of 22.21%.

Mazagon Dock: 44.01% Profit CAGR Since FY22

Mazagon Dock Shipbuilders builds warships and submarines for the Indian Navy and is a key defence shipyard. It reported FY26 revenue of Rs 14,145.71 crore, up 12.77% year on year, and net profit of Rs 2,421.88 crore, up 6.35%. Net profit has compounded at 44.01% a year since FY22, while revenue has grown 23.18% a year. Operating margin was 26.20% in FY26. The debt-to-equity ratio is 0.05, which keeps interest costs low.

The stock trades at a PE of 29.72 against an industry PE of 48.92, below the sector average, with a return on equity of 26.48%. In the June 2026 quarter, revenue rose 10.40% to Rs 3,255.88 crore and net profit grew 22.12% to Rs 512.04 crore. The share price has gained 1461.53% over five years. Promoters hold 81.22%, which keeps ownership stable.

Defence PSU Stocks: Financial Comparison on Growth and Margins

The table compares scale and growth across these defence PSU stocks. Latest quarter means the most recent reported quarter for each company, and only metrics that are positive for every company are shown.

Stock	Revenue (Rs Cr)	Net Profit (Rs Cr)	Revenue Growth (YoY)	4-Year Revenue CAGR	4-Year Net Profit CAGR	Operating Margin (Latest Quarter)
HAL	36,787.95	9,115.52	9.68%	9.48%	15.74%	44.22%
Mazagon Dock	14,145.71	2,421.88	12.77%	23.18%	44.01%	25.82%

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Institutional Holding in HAL and Mazagon Dock

Institutional holding shows who is backing these government defence company shares alongside the promoter. The table uses the latest reported quarter for each. HAL has the deepest institutional backing, with FII and DII together holding 21.98% as of September 2026. Domestic institutions increased their holding over the past year in HAL (from 8.71% to 12.56%).

Stock	Promoter	FII	DII	Public	Quarter
HAL	71.64%	9.42%	12.56%	6.38%	September 2026
Mazagon Dock	81.22%	1.72%	5.01%	12.04%	June 2026

Risks to Weigh in Defence PSU Stocks

Being careful with defence PSU stocks means looking at what can slow the story as well as what can speed it up. Four points matter most:

• Defence earnings depend on the timing of orders and deliveries.
• Large contracts can take years to complete.
• Valuation: A low PE can also reflect slower growth, so compare each PE with the growth rate instead of reading it alone.
• Concentration: Holding both names puts the allocation in one sector, so size each position to match your risk appetite.

How to Choose Between Defence PSU Stocks

Picking from defence PSU stocks comes down to four checks, applied in order.

1. Check balance sheet strength first, and prefer a debt-to-equity ratio below 1 for non-financial companies.
2. Compare each PE with the industry PE (48.59 to 48.92) and ask whether the growth rate justifies any gap.
3. Track the order book, revenue growth and the operating margin in every quarterly result.
4. Stagger entries across quarters and review institutional holding every reporting season.

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Conclusion

Among defence PSU stocks, HAL stands out for the largest market cap at Rs 3,33,050 crore and Mazagon Dock for the highest return on equity at 26.48%. Which one suits a portfolio depends on how much valuation risk it can carry, so staggering entries and reviewing each quarterly result is a sound habit. Investors comparing defence PSU stocks should rank them on growth, financial strength and the price paid, and anyone who wants personalised guidance can consult a SEBI-registered advisor before acting.

Frequently Asked Questions on Defence PSU Stocks to Watch

Which are the best defence PSU stocks to watch for multibagger potential?

Ans. HAL and Mazagon Dock are the 2 names this list highlights, with market caps of Rs 3,33,050 crore and Rs 84,823 crore respectively. HAL is notable for the largest market cap at Rs 3,33,050 crore. Mazagon Dock stands out for the highest return on equity at 26.48%. These are watchlist names for defence PSU stocks, not recommendations, so match each one to your own risk profile and time horizon.

Is Mazagon Dock a good stock for long-term investors?

Ans. Mazagon Dock has a return on equity of 26.48%, a PE of 29.72 against an industry PE of 48.92 and a market cap of Rs 84,823 crore. Net profit has compounded at 44.01% a year since FY22, and FY26 revenue rose 12.77% while June 2026 quarter net profit grew 22.12%. Long-term returns in defence PSU stocks depend on earnings growth and the price paid at entry, so staggering purchases and consulting a SEBI-registered advisor is sensible.

Can HAL become a multibagger from here?

Ans. HAL has already gained 607.71% in five years, so another multi-fold move would need sustained earnings growth. A multibagger outcome in government defence company shares requires earnings to keep growing faster than the market for several years. Net profit has compounded at 15.74% a year since FY22, and FY26 revenue rose 9.68%. At a PE of 35.73 against an industry PE of 48.59, valuation should be checked against that growth before investing.

What is the market cap of HAL and Mazagon Dock?

Ans. As of 16 October 2026, HAL has a market cap of Rs 3,33,050 crore and Mazagon Dock has a market cap of Rs 84,823 crore. HAL is the largest of the group. Market cap changes daily with the share price, so check the latest figure on the Univest Screener or on NSE before taking a decision on defence PSU stocks.

What are the risks of investing in defence PSU stocks?

Ans. The main risks are delays in orders or deliveries, dependence on government spending and long project timelines. Companies with large order books and low debt handle these better. Comparing each PE with growth gives a fuller picture than the PE alone.

Is Mazagon Dock trading below its industry PE?

Ans. Mazagon Dock trades at a PE of 29.72 against an industry PE of 48.92. A lower PE means investors pay less for each rupee of earnings, but it should be read with growth (net profit has compounded at 44.01% a year since FY22 and FY26 revenue rose 12.77%) and balance sheet strength before drawing a conclusion.

How much do institutions hold in HAL and Mazagon Dock?

Ans. As of the latest reported quarter, FII and DII together hold 21.98% of HAL (9.42% and 12.56%) and 6.73% of Mazagon Dock (1.72% and 5.01%). Rising institutional holding is a useful signal in defence PSU stocks, though it should be read with earnings trends rather than on its own.