Operationally, HAL is set to deliver the first LCA Tejas Mk1A to the IAF in coming months and has already received the second F-404 engine from GE, with 10 more scheduled for delivery this fiscal. The IAF's plan to procure an additional 97 LCA Tejas Mk1A aircraft from HAL further enhances long-term revenue visibility.
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Hindustan Aeronautics Ltd. reported a 10.8% YoY growth in revenue likely due to better execution, with Ebitda margin improving by 382 bps YoY to 26.6%. HAL continues to strengthen its position as a key player in India's defence and aerospace, backed by robust prospect pipeline of ~Rs 1.0 trillion over the next few years.
Ongoing investments in capacity, capability, and infrastructure—particularly for programs like LCA Mk2, GE-414 engines, IMRH engines and AMCA—highlight HAL's commitment to advancing India's defense indigenization efforts.
Operationally, HAL is set to deliver the first LCA Tejas Mk1A to the IAF in coming months and has already received the second F-404 engine from GE, with 10 more scheduled for delivery this fiscal. The IAF's plan to procure an additional 97 LCA Tejas Mk1A aircraft from HAL further enhances long-term revenue visibility.
Additionally, the recent contract to manufacture the SSLV developed by ISRO marks HAL's strategic entry into the space technology domain, diversifying its portfolio and opening up new growth avenues.
The stock is currently trading at a P/E of 34.8x/32.1x on FY26/27E earnings. We upgrade the stock from ‘Accumulate' to ‘Buy' given the recent correction in the stock price and value the stock at a PE of 40x Mar'27E (same as earlier) arriving at a target price of Rs 5,500 (same as earlier).
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