The question is not whether India will produce another BEL. The more important question is whether today’s geopolitical environment, rising defence spending and India’s push for self-reliance are creating the conditions for a new generation of defence wealth creators.
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“After September 2001 attacks in USA, I took a debt of Rs. 50 Crores on my portfolio of Rs. 375 Crores. Normally I had 4-5% debt in portfolio. I had biggest bet on public sector units. BEL went from Rs. 25 to Rs. 1,600. BEML went from Rs. 20 to Rs. 1500. So, God was extremely kind to me. I was the right person at the right time with the right attitude.” - Late Rakesh Jhunjhunwala
After 9/11, investors who identified India’s emerging defence-modernisation cycle early benefited enormously from companies such as BEL and BEML. Today, the Russia–Ukraine war and renewed geopolitical tensions are again accelerating defence spending, while India’s push for self-reliance is opening opportunities across defence electronics, ammunition, aerospace and precision manufacturing.
But there is one important difference: today’s defence story is already well known and many valuations have already rerated.
The opportunity, therefore, may not be about finding another BEL at ₹25. It may be about identifying businesses that can convert today’s defence spending into sustained revenue, earnings and cash-flow growth over the next decade.
Wars Create Demand. Businesses Create Wealth.
The 9/11 experience offers an important lesson—but it should not be repeated mechanically.
In 2001, India’s defence sector was relatively under-owned and valuations were modest. BEL and BEML subsequently benefited from years of rising defence spending, technological development, government orders and valuation rerating.
Today, India’s defence budget is dramatically larger and the sector is firmly on investors’ radar. The easy rerating phase has therefore already occurred in many stocks.
The next phase will be decided by execution.
Companies that can consistently grow revenue, convert orders into cash flow, maintain strong returns on capital and move into higher-value products are more likely to become long-term wealth creators. The lesson from BEL and BEML is therefore simple: Geopolitical events can create demand, but sustained earnings growth creates wealth.
India’s Defence Supercycle
The Russia–Ukraine war and US-Iran-Israel has highlighted the need to rebuild global inventories of ammunition, missiles, drones, military vehicles and aerospace components. At the same time, India is increasing domestic defence production and expanding exports.
Three structural forces are particularly important:
Rising global defence spending
India’s Atmanirbhar Bharat programme
Growing Indian defence exports
This could create a multi-year manufacturing opportunity, but investors must distinguish between companies receiving large system-level contracts and those participating indirectly as component suppliers.
Being part of the defence supply chain is not enough. The quality of the business, its position in the value chain and its ability to convert demand into profits matter.
Can India’s Forging Companies Become the Next BEL?
India’s defence opportunity is no longer confined to the familiar names such as BEL and HAL. Beyond the headline defence companies lies a less-discussed layer of the supply chain—specialised forging and precision-engineering businesses manufacturing critical components for defence applications.
This segment rarely gets the same attention, yet the products manufactured by these companies could potentially lead to long-term orders and a new growth opportunity as India increasingly focuses on domestic defence manufacturing and indigenisation.
Balu Forge, Happy Forgings and Tirupati Forge offer three very different ways to participate in this emerging opportunity. Their defence exposure, business quality, scale and execution risk are at different stages—and that distinction matters for investors.
Happy Forgings — Quality First
Among the three, Happy Forgings appears to offer the strongest combination of business quality, manufacturing capabilities, customer diversification, healthy returns and operating cash flow.
Its defence opportunity is still emerging and should be viewed as an additional growth catalyst rather than the core investment thesis. The real attraction remains the company’s underlying business quality, with defence providing potentially meaningful upside if orders develop over time.
Investment character: Potential long-term compounder, provided earnings and CF continue to grow.
Balu Forge — Growth with Higher Expectations
Balu Forge has evolved beyond traditional forgings into precision engineering, with exposure to defence, aerospace, railways, oil & gas and export markets. Its growing defence presence, expanding capabilities and aggressive capacity additions have attracted considerable investor attention.
The opportunity is compelling, but so are the market’s expectations. After a substantial rerating, future returns will depend increasingly on Balu Forge delivering the earnings growth required to justify its valuation.
Investment character: High-growth opportunity accompanied by higher valuation and execution risk.
Tirupati Forge — Higher Risk, Higher Uncertainty
Tirupati Forge provides exposure to the same broader forging and defence-indigenisation theme, but with greater uncertainty because of its smaller scale, less consistent cash flows, customer concentration and execution risk.
Its move into defence-related manufacturing, including artillery shell components, could open a potentially significant new growth avenue. However, its smaller scale, execution requirements and greater dependence on successful defence orders make the investment case considerably more speculative than the other two.
Investment character: Speculative opportunity with potentially high upside, but significantly higher execution and business risk.
The Bigger Picture
The bigger opportunity is not whether any one of these companies will literally become the “next BEL.” It is whether India’s expanding defence-manufacturing ecosystem can create a new generation of winners beyond the traditional defence majors.
For investors willing to look beyond the obvious names, the forging and precision-engineering segment could be one such area worth watching closely.
Where Is the Real Value Created?
Investors should not treat every defence company as equal.
Companies closer to the finished defence product generally enjoy greater pricing power, intellectual-property advantages and contract visibility. System integrators and specialised players in ammunition, electronics and aerospace can therefore capture significantly more value than commodity component suppliers.
Forging companies can still be major beneficiaries—but the quality of the opportunity depends on whether they can move beyond basic manufacturing into specialised, high-value and qualification-intensive components.
The closer a company moves toward technology, qualification barriers and mission-critical products, the stronger its potential competitive advantage.
The Other Viewpoint: Don’t Search for One Next BEL
Rather than trying to identify a single “next BEL”, investors may be better served by building a diversified watchlist across different layers of the defence value chain—then allowing earnings, execution and valuation to determine where conviction increases.
The objective should not be to own every defence stock. It should be to identify businesses where growth, competitive advantage, execution and valuation align.
The Real Risk: Buying the Story Instead of the Earnings
Defence stocks typically move through three stages: geopolitical excitement, order-driven optimism and finally an earnings-and-execution phase.
India appears to be moving increasingly toward the third stage.
Investors should therefore focus on:
Revenue and earnings growth
Operating cash flow
ROCE
Balance-sheet strength
Capacity utilisation and execution
Export growth and Valuation
Don’t buy the war. Buy the earnings that the war creates.
The next BEL may not be a single company. It could emerge from a group of businesses across defence electronics, ammunition, aerospace, materials and precision manufacturing. The opportunity is significant—but unlike 2001, simply buying the defence theme may not be enough.
The next decade is likely to reward companies that combine strong business quality, execution, competitive advantages, cash-flow generation and sensible valuations.
Disclaimer: This report is for educational and research purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. Investors should conduct their own independent research, assess business fundamentals, risks and valuations, timing the entry accessing the Risk-Reward and consult a qualified financial adviser where appropriate. Past performance does not guarantee future returns.