HAL Q4 Results Review - Tejas Mk1A Timelines Are Critical: ICICI Securities

ICICI Securities Report

Hindustan Aeronautics Ltd.’s Q4 FY23 Ebitda was 8% ahead of consensus estimates mainly due to better than expected gross margin. Key highlights:

1. Ebitda margin improved QoQ to 26% at the upper end of 25-26% guidance for FY23-25;

2. provisions, as a percentage of revenue during the quarter, continued to remain high at 16.7% versus the historical range of 6-7%;

3. orderbook as of March 2023 stood at Rs 818 billion;

4. manufacturing contracts worth Rs 260 billion and repair and overhaul contracts worth Rs 166 billion were received during FY23; and

5. tax-related benefit pertaining to prior years of Rs 9.8 billion was recognised in FY23.

Despite an attractive orderbook, we envisage the execution of Tejas Mk1A as the next trigger for the stock. In the interim, we will keep a close tab on the execution of remaining light combat aircrafts and fresh orders of Do-230 and HTT-40.

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