New Delhi, July 14 -- India's defence sector is entering a structural upcycle, driven by an estimated 11% CAGR in defence capital expenditure over FY2026-30, a nearly ten-fold increase in Acceptance of Necessity (AoN) approvals to Rs.9.3 trillion during FY2021-26, and an accelerating push towards indigenisation, according to Kotak Institutional Equities.

The brokerage expects the share of domestic procurement to remain above 70%, up from 54% in FY2019, creating a favourable environment for local defence manufacturers. Companies with strong execution capabilities, diversified product portfolios and large order books are expected to be the key beneficiaries over the medium term.

Kotak Institutional Equities has initiated coverage on Hindu...