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ICICI Securities Report
Hindustan Aeronautics Ltd.'s Q2 FY25 performance missed consensus estimates. Key points:
Revenue growth of 6% YoY was chiefly driven by RoH segment;
delivery of ALF31P engines may contribute to manufacturing revenue in near term;
Ebitda margin was up 30 bps YoY at 27.4%;
provision as a % of revenue declined due to lower proportion of manufacturing revenue; and
exceptional gains stood at Rs 58.9 million.
Going ahead, we believe execution is likely to be impacted in near term due to delay in supply of F-404 engines by GE Aerospace. Hence, we prune FY25/26E Ebitda by 16%/4%. Raise discount rate in DCF model by 100 bps to 11% to account for execution uncertainty. Our revised target price works out to Rs 4,660. Maintain Add.
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