Shares of Hindustan Aeronautics Ltd (HAL) decreased by over 5% during intraday trading on Thursday despite the overall positive market sentiment. The stock is currently priced at Rs 4,212 on the BSE, close to the day’s lowest point.
Over the past year, HAL has delivered significant returns, increasing by approximately 111%. On a year-to-date basis, the stock has gone up by around 49%.
Recently, HAL secured a substantial Rs 26,000 crore contract from the Ministry of Defence for the procurement of 240 aero engines intended for Su-30MKI aircraft. These engines will be produced by HAL’s Koraput division to support the Indian Air Force’s operational capabilities for the Su-30 fleet.
HAL is slated to deliver 30 aero engines annually according to the contract’s schedule, with all 240 engines expected to be supplied over the next eight years. By the conclusion of the delivery period, HAL aims to increase its indigenisation content to 63%, averaging over 54% throughout the contract.
The company’s order pipeline remains strong, with pending orders worth Rs 48,000 crore for various assets, including 25 ALH, 12 LUH, 12 Su-30, and 80 RD-33 engines, which are in advanced stages of finalization. An additional Rs 18,000 crore in orders is anticipated to materialize in the near term, based on reports.
Following the recent deal, Antique Broking raised the target price of HAL to Rs 6,145, citing the company’s potential for multi-year double-digit earnings growth and robust return ratios. However, the brokerage commented that FY25’s operational performance could face moderation due to supply chain challenges, which have delayed the execution of a large Rs 48,000 crore order.
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