Shares of Hindustan Aeronautics Ltd. (HAL) are facing intense pressure in trade on Monday, as markets react to the fatal crash of an Indian Air Force (IAF) Tejas Mk1 fighter jet at the Dubai Air Show on Friday.
The stock is trading at Rs 4,434, which accounts for cuts of more than 3.3%. This compares to Friday's closing price of Rs 4,595.
This comes after the Tejas crash on Friday, which claimed the life of the pilot, immediately amplifying programmatic and reputational risks for HAL.
The Tejas Light Combat Aircraft (LCA), after all, is central to HAL's financial outlook, accounting for 44% of the company's orderbook.
The crash, which took place during the Dubai Airshow, has major ramifications for Hindustan Aeronautics.
That is because any error on the technical or aerodynamic or even human front could potentially delay deliveries and mandate new inspections for all the 180 aircrafts currently on order, including the major Mk1A variant.
Heading into the trading session, CLSA had notably maintained an 'outperform' rating on HAL, but admitted that Tejas is indeed a key part of the company's product portfolio.
However, the brokerage firm believes any drop in share price is an excellent opportunity for investors to accumulate shares of the state-owned company.
Currently trading at a relative strength index of 44, which suggests neutral market sentiment, HAL shares have gained 5% since the turn of the year while over one-year, the stock is up 7%.
Out of 43 analysts tracking the company, 32 maintain a 'buy' rating, nine recommend a 'hold' and two suggests 'sell', according to Bloomberg data. The average 12-month consensus price target of Rs 2,795.24 implies an upside of 14.9%.
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