The brokerage firm Jefferies is bullish on India’s defence and power infrastructure sectors, citing order flows, expanding margins, and growth visibility across key players. In its latest report, Jefferies noted that defence companies like Hindustan Aeronautics and Bharat Electronics are leading the way with contract wins and operating leverage, while infrastructure majors such as L&T, Siemens, and KEI are well-positioned to benefit from India’s accelerating capex cycle.
Let’s take a look at what the brokerages top picks and the key trigger-
Jefferies top picks in defence and power infrastructure space
Jefferies has named four key stocks to watch –
HAL: Strong order wins, 5-year EPS growth visibility
Siemens: Railways and power capex to support revenue and margins
L&T: Rs 19-trillion opportunity pipeline supports management’s growth guidance
KEI Industries: Strong play across power and infra-linked segments
Defence sector soars: HAL, BEL drive margin gains and order growth
According to Jefferies, the defence sector is emerging as a clear winner. Hindustan Aeronautics (HAL) stole the spotlight with a whopping 214% year-on-year growth in FY25 orders, mainly driven by a Rs 62,800 crore mega deal for 156 advanced light helicopters in the fourth quarter.
Jefferies highlighted that defence order inflow grew 89% YoY across its coverage universe. Bharat Electronics (BEL), despite a 47% drop in FY25 order inflows due to a high base, with a 385 bps expansion in operating margins. HAL outperformed even further, clocking an 831 bps jump in margins.
“Management teams of HAL and BEL have guided for margins sustaining or improving from FY25 levels on account of operating leverage,” the report noted, adding that both companies are positioned well for long-term earnings growth. HAL, in particular, has five year earnings visibility with a projected EPS CAGR of 19%.
Infrastructure tailwinds: L&T, Siemens, KEI in focus
Beyond defence, Jefferies remains optimistic on power and infrastructure stocks with improving capex visibility and strong pipelines. L&T saw a 24% YoY rise in Q4 order flow, backed by its biggest-ever order from Qatar LNG. The company’s FY26 guidance of 10% YoY order inflow growth looks well-supported, especially with a Rs 19 trillion opportunity pipeline, which Jefferies says offers “complete comfort” on its targets.
Siemens recorded 43% YoY growth in order flows in Q4, led by a large export order in the railways segment. The company’s management said the “domestic rail pipeline is healthy,” indicating more upside in the coming quarters.
Thermax saw some moderation, with an 8% YoY decline in orders, but the company remains hopeful. “The enquiry pipeline is showing positive signs with some larger projects expected to materialise in 1HFY26,” management said.
Power Sector capex boom: 2.5 times growth expected by 2030
The power sector also presents a compelling investment theme, as per Jefferies. Power Grid Corporation of India pegged the near term bid pipeline at Rs 45,000 crore, while estimating a massive Rs 9.2 trillion capex opportunity in transmission. Jefferies expects India’s total power capex to jump 2.5x to over Rs 25 trillion in FY24-30, compared to the previous seven-year period.
Stocks like KEI Industries are seen as a broad plays across power, housing, exports, and industrial capex. Meanwhile, Siemens energy vertical helped it drive EBITDA gains in Q4FY25 despite modest revenue growth.