Why Defence-Linked Businesses Are Being Closely Watched in Unlisted Markets

In the past few months, there has been increased chatter among pre-IPO market participants, and some common themes have emerged. Defence-related unlisted shares are no longer a niche segment of the market, and have quickly become one of the most actively talked about categories of unlisted shares among investors in the Indian unlisted market.

This development is not the result of speculation, but of policy. Recent aggressive postures to indigenise private manufacturing and record budget allocations are making defence-related, unlisted share companies more attractive to investors.

Here’s an analysis of the rising interest, and what potential investors should consider before pursuing opportunities in this segment of the market.

Table of Contents

• The Policy Backdrop Driving Defence Unlisted Shares
• Why Private Defence Manufacturers Are Increasingly Going the Pre-IPO Route
• What Makes Defence Unlisted Shares Different From Other Sectors
• Where Investors Are Finding These Opportunities
• Goodluck Defence: A Case Study in the Trend
• How to Approach Defence Unlisted Shares as an Investor
• Conclusion
• FAQs

The Policy Backdrop Driving Defence Unlisted Shares

Usually, a sector rotation in the unlisted market is due to a policy or earnings driver, and with defence, it is on a larger-than-usual scale.

As per the Press Information Bureau (Ministry of Defence), the Union Budget 2026-27 had the highest-ever defence allocation in India’s history at ₹7.85 lakh crore, a 15.19% year-on-year increase on the previous year’s defence allocation and accounting for 14.67% of the total Union Budget (PIB, February 2026).

Of this amount, the budget for capital expenditure, which funds new platforms, weapons systems, and modernisation initiatives, had an allocation of approximately ₹2.19 lakh crore, an increase of nearly 22% over the previous year (DefenceXP, February 2026).

For unlisted share investors, capital allocation is a key area of focus. According to PIB’s official statement, about 75% of the capital acquisition budget will be used to procure from Indian manufacturers of the defence industry, with the Atmanirbhar Bharat initiative creating a budget of ₹1.39 lakh crore to procure from Indian manufacturers of defence (PIB, February 2026).

This is not a token step; it’s a major shift in the defence procurement policy to focus on Indian companies, many of whom are still unlisted.

Looking at the actual numbers, this step comes in the wake of a rapid increase in defence production. Indian defence manufacturing surpassed ₹1.78 lakh crore in FY 2025-26, a 15.6% growth year on year, and more than double the FY 2020-21 figure of ₹84,643 crore (Ministry of Defence, Govt. of India).

The figures for defence exports rose in tandem and crossed ₹38,424 crore in FY 2025-26, with almost 50% of this contribution coming from the private sector (PIB, June 2026).

With a rapid shift of procurement in this magnitude to the Indian private sector, unlisted investors have a strong incentive to look at the private sector players on offer to them prior to any public listing.

The unlisted share market at DelistedStocks seeks to capture this gap and, far from being the only sector, allows investors early and exclusive access to defence sector pre-IPO offerings.

Why Are Private Defence Manufacturers Opting For The Pre-IPO Option

​In the past, defence manufacturing was largely dominated by public sector behemoths such as HAL, BEL, Mazagon Dock, etc.

However, the last few years have witnessed a real paradigm shift. Private sector companies engaged in manufacturing components for drones, naval systems, electronic warfare systems, and precision-guided munitions are now growing swiftly, many times having multi-year defence contracts in place.

This results in a fairly certain lifecycle. A private defence company gets an early contract, establishes a manufacturing facility using private equity or venture capital funds, and expands its order book to a scale where going public is attractive, and approaches the Initial Public Offering market.

During the time between, where the company is running contracts and has a credible pipeline but is yet to go public, is when the unlisted shares become relevant.

This is also the reason that a majority of these companies first appear on various platforms that track the unlisted shares of the NSE ecosystem.

Several private sector aerospace and defence companies are now developing such track records, and the platforms that track NSE unlisted shares are usually the first to show these companies to potential investors before they embark on a formal listing.

Why Are Defence Unlisted Shares Unique?

Not all unlisted sectors are the same, and defence, like other sectors, has its own unique features that must be understood before comparison, for example, unlisted defence ventures and those in unlisted sectors like fintech and renewable energy.

Defence manufacturing has high entry barriers. It needs security clearances, more capital, more time to build the infrastructure, and more time to qualify with potential government customers. This barrier to entry provides existing manufacturers some protection.

Defence contracts provide long-term revenue predictability because they are typically much longer than contracts in the consumer sector. Defence contracts are also funded by government budgets, providing more certainty and less sensitivity to economic cycles as compared to consumer contracts.

Growth has become more policy-driven, although this has been a strong growth driver for the industry. Most of the recent growth in this space can be traced to policy rather than demand shifts.

The Union Budget for FY 2026-27 increased funding to the DRDO to ₹29,100.25 crore. The previous year’s funding was ₹26,816.82 crore. Reportedly, approximately 25% of the Defence R&D budget has been earmarked for Indian start-ups and the private sector and academia (PIB, February 2026).

This has created strong growth opportunities, although policy shifts cause growth to shrink rapidly.

India set its defence export target to ₹50,000 crore by 2029. Recent defence contracts with Vietnam and Southeast Asian nations show private defence firms have growth beyond the domestic government contracts. (Ministry of Defence, June 2026).

Where are Investors Finding These Opportunities?

Defense shares that are not listed on the stock exchange can often be found in a handful of places: pre-IPO placement platforms, broker-assisted off-market deals, and structured listings of regional exchange-linked unlisted segments.

Since the National Stock Exchange (NSE) monopolizes retail interest with higher trade volume and visibility, unlisted defense companies that are smaller and more regional tend to access other formal means.

For a more expansive watchlist, consider tracking unlisted share activity with the Unlisted shares in India page.

Several developing companies, including those that are in defense and related manufacturing, have used the segment to help them prepare to be listed, and this is a segment worth considering.

Goodluck Defence: A Case Study in the Trend

Goodluck Defence and Aerospace is a name that is consistently listed when unlisted defense shares are referenced. Analyst coverage identifies the defense enterprise as dealing with strategic manufacturing partnerships, of which they are in supply of BrahMos, and have a procurement license for 155mm artillery shells as well, which are in the procurement activities of the Indian defense enterprise and place them directly in the activities.

While localization requirements are getting stricter and the Indian procurement cycle is becoming increasingly favorable to domestic manufacturers, companies like Goodluck Defence tend to attract more interest from investors, considering their current size.

Investors interested in this company can follow updates related to the Goodluck Defence and Aerospace unlisted share price, which indicate the unlisted company’s valuation with the defense procurement situation and related government policy.

How to Approach Defence Unlisted Shares as an Investor

We have a somewhat favorable view on long-term investing, as certain adjustments can be made in an investing strategy to better manage inherent risk. When it comes to long-term investing, we like to see evidence of signed contracts rather than just the plans for future contracts to be signed.

Private defence companies typically have an option of varying contracts, and you can also differentiate based on the discipline of the balance sheets. This also simplifies their procurement, as companies that are dealing with large amounts of public funds have to be careful about how they manage their cash flow.

Since the funds are public and certain categories do not carry much, you will have to pay close interest to the categories of procurement as the funding will ideally be concentrated in those categories.

Private companies will also sell their shares to the public at inflated prices. Be mindful, as the purchasing pattern is especially pronounced in defence.

The most typical way of ensuring that you can track these companies is to start with the DelistedStocks site to get all the consolidated information about these companies in one place, as opposed to relying on a multitude of brokers to get the scattered information that you might desire.

Conclusion

The growing interest in defense unlisted shares stems from India’s largest defense budget to date. Now, three-quarters of capital procurement is designated for local manufacturers.

Additionally, private players are winning more contracts that were traditionally given to PSUs, which is opening up the pre-IPO window in this sector more than before. However, the same characteristics in this sector that make it attractive also make it more risky.

These include policy dependency, long contract cycles, and limited disclosure. These are additional factors that make the defense sector more risky, and investors should rely more on research than on sector trends. For those investors dedicated to research, defense-linked unlisted companies are one of the more backed opportunities in the present pre-IPO market.

FAQs

Disclaimer

This article is for informational purposes only and should not be considered investment advice. Prices and data of unlisted shares are based on publicly available sources and may vary. Investors are advised to conduct independent research or consult financial professionals before making investment decisions.