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Nirmal Bang Report
The brokerage firm Nirmal Bang projects Hindustan Aeronautics Ltd.'s revenue, Ebitda, and net profit to register a compound annual growth rate of 18%, 19%, and 14%, respectively, over FY26–FY28E. The stock is currently trading at a 1-year forward P/E of 26.1x, above its five-year historical average of ~20x.
Nirmal Bang maintains its Buy rating while revising its target price upward by 13% to Rs 5,432, earlier target price of Rs 4,800, valuing the stock at 31x Mar-28E EPS (28x was the earlier +1.5x SD above the long-term average).
The upward revision in target price is driven by strong order visibility, improving execution outlook, and HAL's increasing strategic importance within India's defence ecosystem.
Further, the ToT agreement with GE for F414 engines for the LCA Mk-2 is expected to gradually reduce external dependence and support faster execution over the medium term.
In addition, HAL's expanded collaboration with Rolls-Royce is expected to strengthen India's indigenous aero-engine manufacturing ecosystem and enhance HAL's long-term manufacturing capabilities.
Q4 FY26 Results Highlights:
- HAL reported revenue of Rs 13,940 crore in Q4 FY26, up 1.8% YoY and 81.1% QoQ, ahead of our estimates by 4.4% and driven by improved execution, higher manufacturing activity, and likely deliveries of RoH orders and AL31FP engines during the quarter.
- Ebitda stood at Rs 5,060 crore, down 4.5% YoY but up 170.4% QoQ, while coming in 6.6% ahead of our estimates.
- Ebitda margin contracted by 237 basis points YoY to 36.3%, primarily due to higher raw material consumption, though margins expanded sharply by 1,198 bps QoQ on the back of improved operating leverage.
- Adjusted PAT stood at Rs 4,200 crore, up 5.5% YoY and 124.8% QoQ, surpassing our estimates by 7.7%, supported by strong other income and better execution during the quarter.
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