Growing government defence spending and national security requirements have been able to lure investors lately. The sector is likely to benefit from prevailing practice of indulging in long-term contracts and ongoing modernisation programs.
The recent rally in defence stocks highlights strategic importance of the sector amid rising geopolitical tensions.
Best asx defence stocks for september
DroneShield Limited (ASX: DRO)
Austal Limited (ASX: ASB)
Electro Optic Systems Holdings Limited (ASX:EOS)
Titomic Limited (ASX: TTT)
DroneShield Limited (ASX: DRO)
posted record results in first half of FY2025. Its revenue jumped 210% year on year to about A$72.3 million which makes this the most profitable half year for the company so far. PBT came at A$5.2 million while secured revenues year to date were A$176.3 million compared to only A$57.5 million for the whole FY2024.The sales pipeline has grown a lot too, now at A$2.34 billion, which is 113% more than HY2024, with 310 projects going on and 13 big deals each worth more than A$30 million. Cash reserves stood at A$207.9 million as on 15 Aug 2025, giving strong flexibility for future investments, while R&D spending stayed heavy at more than A$50 million a year. Its headcount went up to 285 engineers which is 150% higher than last year and this is helping AI based products and SaaS expansion, with SaaS revenue also up 177%. DroneShield is looking to scale in global markets, open manufacturing hubs in Europe and U.S., grow its SaaS and AI offerings. For the coming period management is targeting to double pipeline to A$5 billion by 2026, lift SaaS share further and build recurring revenues.
Austal Limited (ASX: ASB)
had a solid FY2025 with revenue going up 24.1% to A$1.82 billion, mainly from new U.S and Australian shipbuilding projects. EBIT more than doubled reaching A$113.4 million and the EBIT margin also widened to 6.2%. NPAT jumped strongly to A$89.7 million which comes to EPS of 23.6 cps. Operating cash flow turned around big time at A$406.3 million compared to a negative A$13 m in FY2024. Net cash lifted to A$453.1 million helped by equity raisings and a US$488 million debt refinancing. The order book moved up slightly to A$13.1 billion, with 7 ships ordered and delivered and 49 ships being built during the year. Some key milestones were Austal becoming Australia’s sovereign prime shipbuilder under the Strategic Shipbuilding Agreement (SSA), progress on U.S Navy programs like T-ATS, OPC and EPF, plus expansion works at the Final Assembly 2 site and Module Manufacturing Facility. For the future the company expects growth to keep coming from the record defence order book, submarine module output, sustainment works and bigger opportunities in both U.S. and Australian shipbuilding. This will be supported by a strong balance sheet and higher defence spend trends.
Electro Optic Systems Holdings Limited (ASX:EOS)
had revenue of A$44.1 million in 1H FY2025 which is a big drop from A$105.5 million in 1H FY2024 as the large Defence contracts finished up. But gross margin expanded a lot to 76% compared to 44% in the same period last year thanks to the Middle East contract getting completed. Underlying EBITDA was a loss of A$13.3 million compared to a small loss of A$1 million in last year, EBIT showed a loss of A$28.7 million and NPAT was also a loss of A$44.8 million. The contract backlog was very strong at A$307 million on 22 August 2025 which is up 126% from A$136 million at December 2024.The company ended the half with cash balance of A$130.3 million including term deposits and this was boosted by A$160 million from EM Solutions divestment in January and US$40 million. Strategically EOS is focusing conditional Ukraine contracts worth A$181 million and bigger opportunities above A$500 million in HELW and RWS projects around the world. Looking ahead the company expects FY2025 revenue to be more weighted in 2H and it will keep focusing on backlog growth, using capital carefully and commercialising its laser and space control systems.
Titomic Limited (ASX: TTT)
posted a revenue of A$9.4 million in FY2025 which is higher than the A$7.7 million it made in FY2024. Even with this sales growth the company reported an operating loss after tax of A$19.9 million which is much bigger than the A$11.9 million loss in FY2024. This was mainly because of higher expansion costs in US, share based payments of A$6.0 million and total expenses climbing to A$29.5 million against A$20.0 million in FY2024. The balance sheet looked stronger as cash was A$8.9 million in FY2025 while it was only A$2.7 million in FY2024, thanks to capital raises of about A$80 million across October 2024 and July 2025.In FY2025 the company also achieved some big strategic moves with the Huntsville facility of 59,000 sq ft in Alabama starting in June 2025, the Europe expansion in Heerenveen which will open September 2025, and a new Titomic UK entity created in July 2025. For the future, management is expecting more revenue growth in FY2026 from recurring contracts, leasing and sustainment work with Tier One primes and they are aiming to reach operating cash flow breakeven in 2 years with defence and aerospace supply chains giving strong demand.
(Source: Company Announcements)
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