"As ordering remains robust, execution is likely to be the key differentiator across the sector," Nuvama stated.

The brokerage said it remains structurally positive on defence electronics, favouring players with indigenised technology/intellectual property (IP) and low import dependence. Solar Industries India Ltd (SOIL) and Bharat Electronics Ltd (BEL) remain its top picks, supported by strong execution and earnings visibility.

Nuvama has assigned a 'Buy' rating on BEL with a target price of Rs 485. Solar Industries has also received a 'Buy' call, with a target price of Rs 23,435.

For Bharat Dynamics Ltd (BDL), Nuvama said the company is poised for strong growth as Advanced Akash deliveries ramp up, with its Rs 22,600 crore backlog supporting growth. However, elevated competition, margin pressure and execution uncertainty keep the brokerage cautious. It has assigned a 'Reduce' rating to BDL with a 12-month price target of Rs 1,150.

On Hindustan Aeronautics Ltd (HAL), Nuvama highlighted that execution remains the key variable, while near-term upside is constrained until delivery schedules improve. The brokerage has a 'Hold' rating on HAL with a target price of Rs 5,040.

For Data Patterns (India) Ltd, Nuvama said production order conversion, exports and new products provide multiple growth levers. However, at 55 times FY28 estimated price-to-earnings (PE), above its target valuation, it noted that further upside requires stronger order conversion and execution. The brokerage has a 'Hold' rating on Data Patterns with a target price of Rs 4,500.