HAL or Hindustan Aeronautics is in focus after the Ministry of Defence signed a contract for the procurement of 97 LCA (Light Combat Aircraft) Mk-1A aircraft. The contract is worth Rs 62,400 crore. As part of the contract, 68/29 fighters/twin seaters and associated equipment will be procured. Not only is it seen as a decisive push for ‘Make In India’ but also this is the largest ever order for an Indian-built fighter jet.
The delivery of the aircraft will commence in FY28 and will be completed in 6 years. Notably, the acquisition proposal was approved by the Cabinet Committee on Security in August 2025. Many brokerages have given a thumbs up to HAL on the back of this order win
Nomura maintains Buy on HAL
Nomura maintains a Buy on HAL with a target of Rs 6,100 per share. This implies an upside of nearly 27% for the HAL share price.With the receipt of this order, Nomura estimates HAL’s order book to be around Rs 2.45 trillion by the end of Q2FY26.
Furthermore, the brokerage house believes that “ the manufacturing order book will be at Rs 2.25 trillion, thereby implying a book-to-bill ratio of 32x based on FY25 revenue.”
Additionally, “the commencement of the supply of engines by GE is a significant positive in our view, and we believe HAL’s delivery of LCA Mk1A aircraft should start getting streamlined going forward,” they highlighted.
As per their estimates, the stock is trading at 29x FY27 EPS.
Nomura on HAL: Push for ‘Make In India’
As per the report, the aircraft will have indigenous content of over 64%, with 67 additional items incorporated, over and above the previous contract for 83 LCA Mk-1A aircraft signed in January 2021. This is seen as a boost to the ‘make in India’ push.
Furthermore, advanced, indigenously developed systems such as the UTTAM Active Electronically Scanned Array (AESA) Radar, Swayam Raksha Kavach, and Control surface actuators will also be integrated, thereby further bolstering the indigenisation thrust.
Additionally, the project will be supported by a robust vendor base of close to 105 Indian companies directly engaged in the manufacturing of detailed components.
Nomura on HAL: Order delay concerns
However, HNL’s earlier order for 83 LCA Mk1A aircraft has had faced significant delivery delays. .According to the company, this is due to delays in supply of F404-IN20 engines by General Electric.
However, GE has now started supplying engines. According to available reports, GE has supplied three engines so far and is likely to deliver seven more by December this year.
Nomura says that the fact that “two LCA Mk1A aircraft are currently undergoing weapon trials,” is encouraging. Additionally, “despite the engine supply delays, 13 LCA Mk1A aircraft have already completed their first trial flight using CAT-B F-404 engines, underlining HAL’s resilience and its preparedness to promptly start delivering the aircraft upon receiving the engines from GE,” Nomura added.
HAL share price performance
The HAL share price, though flat in trade today, has gained 9% in the last one month and rallied 14% so far in 2025. It is one of the key gainers in the list of the defence sector stocks.