Due to the increasing geopolitical tension between Iran, Israel and America, the discussion about the possibility of war is intensifying in the world. In such an environment, investors have now started looking at the defense sector from a new perspective. When it comes to India’s defense capability, people’s attention usually goes to big companies like Mazagon Dock Shipbuilders Limited and Hindustan Aeronautics Limited. Investors often find these companies to be the safest option in this sector. But behind these big billion dollar contracts, some small companies are also silently making their strong place.
Investors’ attention is increasing on small shares
There are two such smallcap stocks in the defense sector which sensible investors are keeping an eye on. These companies have built strong technological leads around their businesses. Just having money does not give any advantage in defense industry. Here, special research, certification obtained over the years and the ability to make such products which are not easy to change are necessary. This is the reason why some small companies have become an important part of the supply chain of big companies by creating special technical systems. The government is also emphasizing on increasing self-reliance in the defense sector and the Defense Ministry is continuously increasing the list of indigenous equipment. In such a situation, big opportunities can arise for companies that become strategic partners from suppliers.
Lloyds Engineering Works
Lloyds Engineering Works Limited was established in 1974. This company designs and manufactures heavy machinery and systems for hydrocarbon, oil-gas, steel plants, power plants and nuclear projects. As of March 7, 2026, the market cap of the company was around Rs 5,231 crore. In recent years, the company has transformed itself from just a machine manufacturing company to a solution company providing solutions from design to project completion. In July 2025, the company extended partnership with Italy’s largest shipbuilding company Fincantieri. Its objective is to indigenously manufacture Controllable Pitch Propeller (CPP) and shafting system for the Indian Navy, which were earlier imported from abroad. The company has also created a new unit named Lloyds Advance Defense Systems to work in AI, robotics and advanced weapon systems.
financial position of the company
The company’s sales and profits have increased rapidly in the last five years.
- Sales in FY20: Rs 114 crore
- Sales in FY25: Rs 756 crore
- Five-year CAGR: around 46%
The company’s share was around Rs 1 in March 2021, which increased to Rs 46 in March 2026. That means an increase of about 4500%.
Sirma SGS Technology
Sirma SGS Technology Limited is a Chennai based electronics manufacturing service company established in 2004. As of March 7, 2026, its market cap was around Rs 14,685 crore. This company provides services to OEM companies from electronic design to mass production. In 2025, the company purchased a 60% stake in Elkam Integrated Systems, giving it entry into the field of marine electronics and navigation systems. Now the company is moving towards making complete electronic systems like navigation radar and fire detection system for the army. Also, the company is building a new plant worth Rs 1,595 crore in Andhra Pradesh where PCB and Copper Clad Laminate will be made. This will strengthen India’s electronics supply chain.
financial performance
- Sales in FY20: Rs 862 crore
- Sales in FY25: Rs 3,787 crore
- Five-year CAGR: around 35%
At the time of listing in August 2022, the share price was around Rs 310, which increased to Rs 762 by March 2026.
Entry into solar sector also
The company has acquired Ksolare Energy in collaboration with Premier Energies. With this, the company will now start manufacturing solar inverters in India, which can reduce dependence on China.
What does it mean for investors?
The defense sector is no longer dominated only by government giants. Due to new technology and indigenization, some small companies are also growing rapidly. Players like Lloyds Engineering Works Limited and Sirma SGS Technology Limited are gradually moving up the value chain.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsh advises its readers and viewers to consult their financial advisors before taking any money-related decisions.