Hal Shares: Why This Psu Defence Stock Is A 'buy'; Here's Price Target

Hindustan Aeronautics Ltd (HAL) has received a 'Buy' standing from MOFSL, arsenic nan  brokerage stayed upbeat connected nan defence aerospace conception and believes immoderate of nan awesome proviso concatenation issues pinch HAL are broadly nether control.  

HAL would now person to attraction connected execution, MOFSL said, arsenic it suggested a target value of Rs 5,100, based connected March 2027 estimated earnings. The target suggested a 18.74 per cent imaginable upside complete Thursday's closing value of Rs 4,294.90 apiece. 

MOFSL noted that location is simply a request to put defence and aerospace projects connected a accelerated way and said nan full addressable marketplace (TAM) for HAL would stay beardown  over nan adjacent 2-3 years. 

This is wherever nan first groundwork connected prototypes is already being done for projects specified arsenic follow-on orders from Tejas Mk1A (97 aircraft) worthy Rs 65,000 crore, Su-30 Mk1 (84 aircraft) worthy Rs 63,000 crore, followed by LUH and NUH orders, and subsequently Tejas Mk2, MOFSL said.

"This translates into a medium-term pipeline of Rs 2.4 lakh crore for HAL, and nan wide semipermanent TAM remains astir Rs 6 lakh crore," MOFSL said.

According to its chat pinch a defense expert, MOFSL said India is apt to activity bids this twelvemonth for 114 multi-role combatant aircraft. The Indian Air Force plans to statesman induction of these planes successful nan adjacent 4 to 5 years done a fast-tracked MRFA world tender worthy $20 billion. 

This planned induction of these 114 multirole combatant jets is needed to thief nan IAF support its squadron spot complete nan adjacent 10 years on pinch nan indigenous combatant jets (including nan different variants of nan Light Combat Aircraft, specified arsenic nan Mark 1A and nan Mark-2). 

Various craft that tin beryllium portion of nan world tender and early requirements of nan IAF could beryllium nan F-35, Su-57E, Super Sukhoi, South Korean KF21 Boramae, Saab JAS 39E/F Gripen, and Lockheed Martin F-21, MOFSL said.

Other options that tin besides beryllium successful nan queue could beryllium nan F-16, F-18, MiG-29 upgrade, Eurofighter Typhoon and MiG-31. 

"However, we are fixed to understand that nan authorities will person to return a balanced position based connected 1) retiring nan fleet and nan contiguous requirements of nan IAF, 2) budgetary constraints successful sourcing ample G2G deals, 3) exertion transportation and immoderate benignant of indigenization use to Indian players aliases constituent suppliers, arsenic good arsenic 4) early attraction and integration of these caller fleets into nan existing fleet," MOFSL said.

The broking patient expects HAL's wide gross to grounds a CAGR of 29 per cent complete FY25-27, chiefly led by a crisp scale-up successful manufacturing gross and a 5 per cent CAGR successful RoH and spares. 

It projected HAL's Ebitda separator to stay beardown astatine 25.9  cent, 27.4 per cent and 27.6 per cent for FY25, FY26 and FY27, respectively. This would beryllium fueled by indigenisation efforts taken by nan management. 

"With an yearly capex of Rs 3,000-Rs 5,000 crore and comfortable moving capital, we expect HAL's PAT to registry a 29 per cent CAGR complete FY25-27. With improving gross and unchangeable margins, we expect HAL’s RoE/RoCE to stay comfortable, reaching 22.5 per cent/23.2 per cent by FY27," MOFSL said.

Published on: Apr 25, 2025 7:45 AM IST