Four aerospace stocks to watch as India builds its MRO industry

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For two decades, India’s airlines have sent much of their aircraft maintenance work abroad. That may finally be changing.
Indian airlines operate one of the fastest-growing aircraft fleets in the world, but until recently, much of the major maintenance, repair and overhaul (MRO) work on that fleet was carried out overseas, particularly in Singapore, the Gulf and Sri Lanka.
Every engine or aircraft sent abroad for an overhaul meant foreign exchange flowing out of India, along with the jobs, tooling investment and supplier ecosystem that could have developed around the work.
Now, the government is trying to change that equation. A series of policy measures has made it cheaper and easier to set up and operate MRO facilities in India.
The government has cut goods and services tax (GST) on MRO services from 18% to 5%, reduced IGST on imported aircraft components and engine parts to 5%, and allowed subcontracted work from foreign original equipment manufacturers to be treated as exports with zero-rated GST.
It has also extended the exemption from basic customs duty on MRO parts and tools until 31 March 2028, allowed 15-year extensions on land leases at Airports Authority of India airports, and introduced a moratorium and rent-free period for new hangar construction under an addendum to the MRO Guidelines 2026 issued on 20 February. Safran’s ₹1,300 crore investment in an engine MRO facility in Hyderabad is an early sign of capacity being built in response to the opportunity.
The policy changes matter because India’s MRO market has long had a basic problem: a large and growing fleet, but insufficient domestic capacity to service it.
The question for investors is where listed companies fit into that emerging opportunity. There are no obvious pure-play listed MRO companies among the major aerospace names. Instead, exposure comes through a mix of defence maintenance, lifecycle support, aerospace manufacturing and direct civil MRO capacity.
Hindustan Aeronautics: the maintenance benchmark
First is Hindustan Aeronautics (HAL), which has one of the largest and most established MRO businesses among listed Indian aerospace companies.
HAL is best known for building the Tejas and its role in India’s indigenous fighter programme. Less discussed is its Repair, Overhaul and Maintenance segment, or ROH, which contributes roughly ₹20,000 crore a year to revenue, or about a third of the company’s total.
HAL maintains and overhauls a large share of the aircraft, helicopters and engines operated by the Indian Air Force and Navy. That creates a recurring revenue stream because maintenance continues for as long as the fleet remains in service, irrespective of the pace of new aircraft deliveries.
In Q1FY27, its revenue rose 14.4% to ₹5,515 crore and net profit increased 14.9% to ₹1,590 crore. The order book stands at a record ₹2,54,538 crore, while management has reaffirmed 10-12% revenue growth guidance for FY27.
HAL’s MRO business is overwhelmingly military rather than the civil aviation work targeted by the latest tax reforms, so the company is not a direct beneficiary of the GST cut on commercial MRO services.
What HAL does provide is a working example of the recurring maintenance economics that India’s civil aviation industry is seeking to build as its fleet expands.
The company continues to face execution risks around LCA Mark-1A deliveries, linked to GE Aerospace engine supplies, with liquidated damages already imposed for past delays.
Bharat Electronics: from equipment to lifecycle support
Bharat Electronics Ltd (BEL), India’s primary defence electronics maker, offers another form of maintenance exposure: lifecycle support.
BEL's core business is radars, electronic warfare systems, avionics and communication equipment. Increasingly, however, the company is seeking to remain involved after equipment has been delivered.
In early 2026, BEL approved Project HAMMER, a 50:50 joint venture with Safran Electronics & Defence for the manufacture and maintenance of the HAMMER precision-guided weapon system in India.
It also operates BEL IAI AeroSystems, a joint venture with Israel Aerospace Industries, which provides lifecycle support for India’s medium-range surface-to-air missile systems.
Such contracts can provide recurring revenue over the operating life of a defence system rather than limiting a supplier's revenue to the initial equipment sale. That makes lifecycle support relevant to the broader maintenance theme, although it is distinct from the civil aircraft MRO opportunity targeted by the latest policy measures.
BEL’s June quarter was strong on the numbers that matter today: standalone revenue rose 25.3% to ₹5,533 crore, while profit increased 8.2% to ₹1,048 crore. Its order book stood at ₹72,258 crore.
Ebitda margin, however, contracted to 25.11% from 28%, mainly because of higher material costs. With profit growth running at around a third of the pace of revenue growth, margins and profitability will be worth watching over the coming quarters.
BEL is targeting exports to account for 10% of total revenue within five years, with $300 million expected from exports this year. The company has also guided for order inflows of more than ₹55,000 crore in FY27.
Aequs: building into the MRO opportunity
Aequs offers a more direct link to the commercial aerospace supply chain.
The company is a vertically integrated aerospace component manufacturer operating from a dedicated SEZ in Belagavi. It is the first Indian company to assemble plug doors and over-wing exit doors for both Airbus and Boeing.
Qualifying a new aerospace component typically requires 12-18 months of testing and certification. Once a supplier has cleared that process, changing suppliers can be expensive and time-consuming for an aircraft manufacturer.
Aequs is also developing an MRO facility in partnership with Magellan Aerospace, giving it a direct route into the maintenance market that the latest policy changes are intended to support.
The company’s Q1FY27 performance shows the scale of its ongoing expansion. Consolidated revenue rose 55% year on year to ₹396 crore, while its aerospace order book crossed $1 billion for the first time.
Aequs nevertheless reported a net loss of ₹53.2 crore, mainly because of higher depreciation and finance costs linked to its capacity expansion. Operational Ebitda, excluding other income, improved 3.5 times sequentially.
The company's investment in new aerospace capacity comes ahead of expected long-term demand, while the current losses reflect the costs of building that capacity.
Taneja Aerospace: the direct MRO exposure
Taneja Aerospace and Aviation is the smallest company among the four and the one with the most direct physical exposure to civil MRO.
Listed as TAAL on the BSE, the company operates from Hosur in Tamil Nadu across three businesses: aircraft and aerospace manufacturing, and aviation infrastructure covering airfield and MRO services.
It owns a hangar capable of accommodating Boeing 737 and Airbus A320-class aircraft—the kind of infrastructure that India needs to expand its domestic MRO capacity.
Building a hangar and securing airport land can be a lengthy and capital-intensive process. Taneja therefore already has an asset that new entrants would have to build.
The February 2026 addendum to the MRO guidelines provides a moratorium and rent-free period for companies building new capacity. That could lower the initial cost of setting up new MRO facilities and, in turn, increase competition as more capacity comes onstream.
Going forward, Taneja also plans to manufacture components for new-generation helicopters.
The opportunity—and the catch
India has talked about becoming an MRO hub for more than a decade, even as much of its major aircraft maintenance continued to be carried out overseas.
The latest reforms are more substantial than earlier attempts, including an actual reduction in the GST rate. But the ultimate test is whether airlines, foreign carriers and aircraft lessors actually redirect maintenance volumes to India.
Tax incentives can improve the economics of domestic MRO, but they cannot create capacity overnight. Hangars, tooling, skilled workers and certification capabilities take years to develop.
That also means the listed investment universe is not straightforward. None of these four companies is a pure-play MRO stock. HAL and BEL provide established examples of recurring maintenance and lifecycle-support revenue in defence; Aequs is building capacity across the commercial aerospace supply chain and into MRO; and Taneja has direct hangar-based MRO exposure.
The policy may be creating a larger domestic MRO market. The next question is which companies can convert that opportunity into sustained revenue and profits.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com

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