Hindustan Aeronautics Ltd. (HAL) reported its Q2 FY27 results, with operating margins missing analysts' expectations. However, brokerages remain positive on the defence PSU, citing its strong order pipeline, improving engine supplies and attractive valuations.
HAL's consolidated net profit for the second quarter of FY27 rose 16% to Rs 1,936 crore from Rs 1,669 crore in the corresponding quarter last year. Revenue from operations increased 14.8% year-on-year (YoY) to Rs 7,613 crore from Rs 6,629 crore.
While both revenue and net profit came in above estimates, the company's operating performance disappointed.
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Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 11.6% YoY to Rs 1,739 crore from Rs 1,558 crore. However, EBITDA margin contracted to 22.8% from 23.5% in the year-ago period.
Despite the margin miss, brokerages have largely maintained their positive stance on HAL, supported by its strong order book and healthy near-term order pipeline. Improving supplies of GE F-404 engines and the anticipated delivery of Tejas Mk1A fighter aircraft remain key growth catalysts.
Here's what leading brokerages have said about HAL following its Q2 FY27 results:
JPMorgan on Hindustan Aeronautics
Rating: Overweight | Target Price: Rs 5,733
> Tejas Mk1A deliveries remain a key catalyst, with more than 20 aircraft ready and GE engine supplies showing signs of improvement.
> HAL's Rs 2.54 trillion order book and a near-term order pipeline of Rs 900 billion over the next two years provide strong long-term growth visibility.
> The brokerage retained its FY27 revenue growth guidance of 10–12% and EBITDA margin target of 30–31%.
> JPMorgan expects HAL to deliver a 10% CAGR in profit after tax (PAT) over FY26–FY29.
Goldman Sachs on Hindustan Aeronautics
Rating: Buy | Target Price: Rs 5,870
> Improving supplies of GE F-404 engines and anticipated Tejas Mk1A deliveries remain key growth catalysts.
> Higher helicopter deliveries and fresh defence procurement approvals are expected to support medium-term growth visibility.
> An unfavourable manufacturing mix could weigh on margins.
> However, valuations below 30 times forward earnings offer support to the stock, according to the brokerage.
Kotak Institutional Equities on Hindustan Aeronautics
Rating: Add | Raised Target Price to Rs 5,410 from Rs 5,305
> Tejas Mk1A deliveries remain a key growth catalyst, although execution will depend on radar and weapons integration, along with sustained supplies of GE engines.
> A near-term order pipeline of Rs 900 billion supports the company's growth outlook.
> Kotak expects HAL to clock a revenue CAGR of 16% over the next five years.
> The brokerage raised its FY27 EPS estimate by 1% and expects a PAT CAGR of 16% over FY26–FY29.
> However, continued margin pressure remains a key risk.
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