India’s midcap defence manufacturers: The silent force behind a national security renaissance

Why Are India’s Midcap Defence Stocks Gaining Serious Traction?

India‘s long-standing ambition for strategic autonomy in defence has traditionally revolved around public sector giants like Hindustan Aeronautics Limited and Bharat Electronics Limited. But in 2025, the spotlight is shifting toward a cadre of lesser-known but rapidly advancing midcap companies. These firms—once considered marginal contributors—are now actively delivering cutting-edge platforms, subsystems, and exports, often in high-barrier segments like missile integration, war gaming, radar technologies, and next-gen small arms. With rising investor interest, export visibility, and deeper linkages to flagship programmes like LCA Tejas, Pinaka MBRLs, and DRDO-AI labs, these companies are no longer just suppliers—they’re strategic assets in India’s defence future.

How Zen Technologies Is Redefining Military Simulation Systems in India

Zen Technologies Limited (NSE: ZENTEC) is widely acknowledged as India’s pioneer in defence simulation systems. Its technology portfolio includes live fire, virtual reality-based combat simulators, and AI-driven decision training tools. These offerings are increasingly vital in modern military training environments, where operational realism and rapid deployment cycles are critical. As of FY25, Zen continues to benefit from central government orders and rising export inquiries from the Middle East and Southeast Asia. The company has also aggressively positioned itself in the Make-II and iDEX procurement categories, enabling faster access to prototype-driven tenders.

The market has rewarded its R&D-led model, and ZENTEC’s stock has gained institutional following in recent quarters. With a capex-light, IP-rich approach and strong EBITDA margins exceeding 30%, Zen Technologies is often cited in investor forums as the “underrated multiplier” in India’s digital defence story.

Why MTAR Technologies Is Becoming a Strategic Supplier for Missiles and Space

MTAR Technologies Limited (NSE: MTARTECH) has built its reputation on precision manufacturing for nuclear, aerospace, and defence applications. Its contribution spans cryogenic engines for ISRO, components for DRDO missile systems, and fuel assemblies for nuclear reactors. In FY25, the company deepened its integration with Indian space missions while continuing supplies for strategic defence platforms, including Agni series missiles and propulsion assemblies.

MTAR’s revenue visibility is underpinned by multi-year contracts and its engineering moat, with margins consistently in the 25–30% range. It is often seen as India’s answer to legacy Western precision engineering firms but with stronger localisation and vertical integration. Analysts remain bullish on MTAR’s ability to capture long-cycle defence and aerospace programmes, especially with the surge in indigenous R&D and decoupling from imported propulsion tech.

How Sika Interplant Is Powering India’s Defence Electronics Backbone

Bangalore-based Sika Interplant Systems Ltd. has historically flown under the radar, but the firm plays a vital role in mission-critical systems such as telemetry units, ground support electronics, and electronic warfare components. Unlike the more visible manufacturers, Sika supplies the backbone infrastructure that powers radar platforms, missile ground support systems, and real-time threat response networks.

Its FY25 performance reflects its slow but steady approach, with improved topline and margin stability following delivery of several long-pending contracts. Sika’s rising involvement in DRDO programmes and integration with larger public sector defence platforms could see it emerge as a strategic Tier-II electronics partner in the coming quarters.

How Solar Industries Became India’s Largest Defence Ammunition Manufacturer

Solar Industries India Limited (NSE: SOLARINDS) is not just India’s largest manufacturer of commercial explosives—it is now a defence sector heavyweight in ammunition and rocket propulsion systems. The company supplies everything from warhead explosives and propellants to critical energetic materials for India’s missile programmes. FY25 marked a turning point, as the company scaled up production under the Pinaka Multi Barrel Rocket Launcher ecosystem and began exports to African and Southeast Asian defence markets.

Solar Industries has been the quiet success story in India’s push to reduce import dependence in critical munitions. With deep vertical integration, a strong manufacturing footprint, and increasing automation, the company enjoys both operational scale and policy tailwinds from India’s Strategic Partnership Model.

Why VEM Technologies Is Critical to India’s LCA Tejas Fighter Programme

VEM Technologies Pvt. Ltd. is a Hyderabad-based firm that’s become a critical partner in the development of India’s Light Combat Aircraft (LCA) Tejas programme. It manufactures large airframe assemblies and precision subsystems including mission computers, fire control radars, and avionics racks. VEM is among the few Indian players with end-to-end design-to-assembly capabilities for tactical platforms.

Although not yet listed, VEM’s visibility has grown thanks to its high-value, high-complexity involvement in aerospace programmes. With HAL increasingly offloading work to private partners due to capacity constraints, firms like VEM could benefit from rapid revenue scaling and future IPO potential.

Can SSS Defence Lead India’s Small Arms Manufacturing Revolution?

SSS Defence is positioning itself as India’s first fully indigenous small arms OEM, with a portfolio that includes sniper rifles, assault rifles, and pistols. The firm recently secured high-profile orders from Indian paramilitary and special forces, and its guns are already undergoing trials for wider induction. SSS’s pitch—ergonomic, modular, NATO-compatible designs—aims to disrupt India’s historically import-heavy small arms segment.

In FY25, the company opened a new facility with capacity for over 80,000 units annually, reflecting demand expectations. While still privately held, SSS Defence is on every institutional radar due to the immense addressable market and the Indian Army’s phased procurement shift from imports to local options.

How Tata and Adani Are Scaling India’s Defence Manufacturing Ecosystem

While midcaps are leading on innovation, India’s large conglomerates are scaling industrial capacity. Tata Advanced Systems continues to expand its footprint across unmanned aerial vehicles, missile integration, and radar systems. The company remains the lead partner for Boeing and Lockheed Martin in India, assembling fuselages and aerostructures. Adani Defence & Aerospace, meanwhile, has become a serious contender in the drone and ammunition space through multiple acquisitions and greenfield manufacturing initiatives in Uttar Pradesh and Hyderabad.

Both players are critical to India’s industrial base-building in defence, but their size often eclipses the agility and niche expertise that midcaps bring to the table. The future will likely see co-existence—conglomerates building platforms, midcaps supplying the tech.

What’s Driving the Rise of India’s Midcap Defence Stocks—and Where It’s Headed Next

The pivot toward midcap defence innovation is being powered by a unique confluence of forces: a record ₹1.6 lakh crore capital outlay in the Union Budget for defence modernisation, 200+ items on the Defence Positive Indigenisation List, and revamped procurement categories like SPV, iDEX, and Make-II that actively encourage private sector participation. These have lowered entry barriers for IP-led manufacturing companies while rewarding those with risk appetite and technical depth.

Going forward, investors will be watching key metrics like export licensing data, MoD contract wins under new procurement models, and capacity expansion announcements. Market sentiment suggests that India’s midcap defence pack is no longer just a policy beneficiary—it’s an emerging structural theme, ripe for long-term allocation and valuation re-rating.

India’s defence industrial story is being rewritten not by government monopolies, but by nimble, capital-efficient, and tech-driven midcap companies. As the geopolitical backdrop hardens and procurement complexity rises, these firms may well be the ones building the future battlefield from the ground up—quietly, but impactfully.