Broker’s call: Hindustan Aeronautics (Buy)

Target: ₹5,650

CMP: ₹4,850

Hindustan Aeronautics (HAL) has reported a better-than-expected FY25 performance, driven by improved margins on the back of lower provisions. The company ended the year with a robust order book of ₹1.8 lakh crore, clocking inflows of INR1t. With engine supplies from GE, HAL is optimistic about delivering 12 Tejas Mk1A aircraft during the year along with the execution of other projects.

Management provided a conservative guidance of 8-10 per cent revenue growth, taking into account certain contract amendments,and it will revisit this guidance after six months. Our estimates build in healthy execution of the manufacturing order book.

We revise our estimates upwards by 12/4 per cent and roll forward our TP to ₹5,650 based on the average of DCF and 32x Jun’27E earnings.

Since our initiation in Apr’25, the stock has moved up 27 per cent due to the current geopolitical issues across the border. We are still constructive on the overall defence space, but the recent rally has been too sharp. While we reiterate our BUY rating, we would wait for better entry points as we acknowledge that risk-reward is not favourable at this point.

Key risks: slower-than-expected finalisation of large platform orders, further delays in deliveries of key components such as engines for Tejas Mk1A, delays in payments from MoD and increased involvement of the private sector

Published on May 20, 2025

📰 Crime Today News is proudly sponsored by DRYFRUIT & CO – A Brand by eFabby Global LLC

Design & Developed by Yes Mom Hosting