Private defence companies in India are gearing up for a solid 16-18% revenue boost this financial year, thanks to surging domestic demand, says a new Crisil report. This comes hot on the heels of a 20% compound annual growth rate that these firms achieved from fiscal 2022 to 2025.
What’s driving this momentum? Strong government policies have opened the doors for big private investments in research and development (R&D) and capital expenditure (capex). These moves have beefed up company capabilities, helping them snag larger orders in the competitive Indian defence sector. Expect profitability to stay steady, with operating margins hovering around 18-19%.
Equity infusions totaling about Rs 3,600 crore over the last three fiscal years—on a net worth base of Rs 4,760 crore at the end of fiscal 2022—have kept balance sheets in great shape. Even with rising working capital needs and more capex ahead, these funds provide a solid cushion.
The Crisil analysis draws from over 25 rated private defence companies, which account for nearly half of the industry’s total revenues. While public sector giants still lead India’s defence landscape, private players are gaining ground fast. They’re capitalizing on government pushes for local procurement and self-reliance, like higher defence budgets amid global tensions.
This environment has drawn in fresh capital through initial public offerings (IPOs) and private equity deals, fueling innovation and R&D in the defence industry. “Over the past three fiscals, defence companies have seen equity infusions of around Rs 3,600 crore,” noted Jayashree Nandakumar, director at Crisil Ratings. “A third went to working capital, but almost half powered capex, R&D, and innovation—strengthening private sector defence companies and landing them bigger orders.”
Looking ahead, enhanced skills mean order books will keep swelling, backed by initiatives like the Emergency Procurement Plan, Atmanirbhar Bharat, the Defence Acquisition Policy, and the Defence Production and Export Promotion Strategy. These efforts promote homegrown tech and exports in key areas.
Overall, order books could hit Rs 55,000 crore by the end of this fiscal year, up from Rs 40,000 crore at fiscal 2024’s close. Hot segments include electronic warfare systems, C4 systems (command, control, communications, computers, and intelligence), and aerospace gear.
A robust order book spells clear revenue visibility for private defence firms in India. With built-in price hikes in contracts and steady growth, that 16-18% revenue jump looks locked in, while margins hold firm at 18-19%.
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