Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
4 ASX Defence Stocks to Watch in 2027: Can Rising Defence Budgets Fuel Growth?
Highlights
Defence used to be a quiet corner of the ASX. That changed when the 2026 Integrated Investment Program set aside up to AU$130 billion for undersea warfare, including the AUKUS submarine program, and up to AU$15 billion for autonomous and uncrewed systems, according to Defence and the 2026-27 Budget.
Big budgets do not guarantee profits, though. Defence contracts are lumpy, often conditional and slow to turn into cash. So the real question is which listed companies can convert government spending into revenue you can actually see in their reports.
What Makes ASX Defence Stocks Worth Researching in 2027?
Focus on three things: the order book (signed work not yet delivered), how much of it is conditional, and cash on hand.
1. Austal Limited (ASX: ASB)
Austal builds naval ships in Australia and the US, including submarine modules for the US Navy. Its 27 October 2026 AGM presentation showed FY26 revenue of AU$2.03 billion and a AU$16.5 billion order book. However, it also showed an EBIT loss of AU$125.2 million, driven by US shipbuilding. Two parties have also made offers for Austal USA.
What to watch: whether the US unit is sold, and whether Austal wins the Mogami-class frigate build.
2. DroneShield Limited (ASX: DRO)
DroneShield makes counter-drone systems that detect and jam hostile drones. On 15 October 2026, it reported FY2026 committed revenue of AU$261 million, the midpoint of its AU$250-270 million outlook. The risk is visibility: only AU$29 million of revenue was committed for FY2027 at that date.
What to watch: the pace at which orders for FY2027 are filled.
3. Electro Optic Systems Holdings Limited (ASX: EOS)
EOS covers both drones and space, making remote weapon systems, laser weapons and space tracking sensors. Its 26 October 2026 quarterly showed a AU$717 million order book and a new AU$9.5 million Australian space contract. A Kuwait counter-drone contract worth about AU$700 million is still conditional, and cash fell AU$123 million in the quarter. What to watch: whether the Kuwait contract becomes unconditional.
4. Elsight Limited (ASX: ELS)
Elsight's Halo unit keeps drones connected across several networks at once. Its 28 October 2026 report showed US$25.8 million in revenue for the first nine months of 2026, up 91%, and cash of US$59.4 million with no debt. However, September-quarter revenue was only US$2.4 million, with a loss.
What to watch: orders through its new US Army ordering agreement.
How to Follow ASX Defence Stocks Through 2027
Each quarter, compare order books, conditional contracts and cash. Austal gives you scale but a loss-making US arm. DroneShield and Elsight depend on drone orders that arrive unevenly. EOS's conditional Kuwait deal is close to the size of its AU$717 million order book.
Also check Defence updates on the Integrated Investment Program, because delays or re-scoping can push revenue out. Treat these as companies to research, and weigh each risk against the size of its order book.
Note- All data presented is based on information available at the time of writing.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Disclosure: The information mentioned above has been sourced from the company reports and a third-party database, i.e. Koyfin. Investors are advised to use strict stop-loss to protect their investments in case of any unfavorable/uncertain market events.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au