HAL Q4 Review: Jefferies Gives Second-Highest Price Target On Margin Expansion, Robust Order Visibility

Hindustan Aeronautics Ltd. gets a price target boost from Jefferies on robust order visibility and margin expansion. The brokerage has raised its price target to Rs 6,475, up 33% from its previous target of Rs 4,715.

That's the second-highest price target so far among the analysts tracked by Bloomberg.

HAL's fourth-quarter Ebitda for the previous fiscal beat expectations by 4%, with a standout margin of 38.7%, with a surprise jump of 765 basis points. Jefferies noted that management sees margins stabilising at 30–31% going forward, driven by a focus on cost optimisation.

The firm expects the combination of high-margin service income and aircraft deliveries to support double-digit revenue growth for the next three to five years.

Jefferies called HAL's 8% to 10% revenue guidance for fiscal 2026 "conservative" and pointed to recent geopolitical developments, including India-Pakistan tensions and Prime Minister Narendra Modi's endorsement of 'Made in India' equipment, as reinforcing the company's domestic manufacturing tailwinds.

The report highlights HAL's Rs 1.89 lakh crore order book—6.1 times the fiscal 2025 revenue—and a Rs 2.5 lakh crore pipeline, which Jefferies believes ensures revenue visibility well into the upcoming five fiscals. Key orders include the Tejas Mark 1A, Advanced Light Helicopters, and Sukhoi-30 upgrades.

Management is guiding for 8–9% compound growth in manufacturing revenue and 15–18% in the medium term, supported by ramp-ups in GE engine deliveries and local production.

Jefferies has also increased its fiscal 2026 and 2027 EPS forecasts by 3%, citing the company's improved standing among defence PSUs and a rising interest in India's self-reliance in defence manufacturing.

The stock currently trades at 40 times its fiscal 2026 EPS, and Jefferies sees this as reasonable given HAL's asset-light balance sheet and its pipeline of OEM tie-ups.

• Revenue down 7.24% at Rs 13,699.85 crore versus Rs 14,768.75 crore.

• Ebitda down 10.28% at Rs 5,294.9 crore versus Rs 5,901.26 crore.

• Margin down 130 bps at 38.64% versus 39.95%.

• Net profit down 7.7% at Rs 3,976.66 crore versus Rs 4,308.71 crore.