Hindustan Aeronautics has secured another large defence order, but the bigger story in CLSA’s latest report is what the company could win after the 138-helicopter procurement. The brokerage house retained its ‘Outperform’ rating and Rs 5,481 target price, implying 13% upside.
The Defence Acquisition Council on September 7 cleared capital acquisition proposals worth $11.5 billion, including 138 Advanced Light Helicopters from Hindustan Aeronautics. CLSA estimates the HAL order at $3.4 billion, or about Rs 32,000 crore, would add around 12.5% to its existing order book.
The brokerage sees a sizeable pipeline across fighter aircraft, helicopters, engines and aircraft upgrades, with the latest approval adding to its conviction that HAL’s order visibility extends well beyond the Advanced Medium Combat Aircraft programme.
HAL: Two key takeaways from CLSA’s report
| What changed | What CLSA sees ahead |
| 138 Advanced Light Helicopters approved | About Rs 32,000 crore order, adding roughly 12.5% to HAL’s backlog |
| Defence pipeline expanding | Around $25 billion of manufacturing order inflows expected over FY26-FY30 |
HAL’s next order could be bigger than the latest helicopter deal
CLSA’s thesis does not rest on the latest helicopter contract alone. The brokerage estimates that India’s aerospace opportunity over the next decade could reach Rs 10.4 lakh crore, while the opportunity specifically available to HAL over the next eight years stands at about Rs 4.5 lakh crore.
The brokerage was particularly emphatic about the government’s defence procurement pipeline. “This validates our view of enough orders left for HAL beyond AMCA, and Modi 3.0 walking the talk on defence Make-in-India.”
The pipeline includes additional Advanced Light Helicopters, Light Utility Helicopters, Tejas Mk1A and Mk2 aircraft, Indian Multi-Role Helicopters and the Sukhoi-30MKI upgrade. CLSA expects manufacturing order inflows to reach about $25 billion during FY26-FY30, 35% higher than the FY21-FY25 period.
Sukhoi-30MKI upgrade is another major opportunity
One of the more significant opportunities is the Sukhoi-30MKI upgrade programme. CLSA said the government has approved funding for 90% of the $750 million design and development programme.
The brokerage estimates a potential $7.6 billion order to upgrade avionics and radars on 84 Sukhoi-30MKI aircraft. The programme would involve indigenous avionics, mission computers, software-defined radios and the Virupaksha active electronically scanned array radar.
The report also lists a potential $7.3 billion Light Combat Helicopter order, a $3 billion AL31FP engine order, a $1.3 billion Sukhoi-30MKI repeat order and a $7.8 billion Tejas Mk1A repeat order among its longer-term catalysts.
Tejas and engine programmes could drive the next phase
For HAL, the order opportunity is increasingly tied to production and delivery milestones. CLSA’s catalyst list for 2027 includes the start of Tejas Mk1A deliveries, the first flight of Tejas Mk2, a potential GE414 technology-transfer agreement and a 20-engine-a-year run rate for GE404 engines.
The brokerage is also watching the entry of active electronically scanned array radar into mass production and a large export order from Safran for LEAP engine components. Across FY26-FY31, CLSA has identified 15 potential catalysts that could support HAL’s performance.
This means the company’s opportunity is spread across several programmes rather than being dependent on a single aircraft or helicopter award. The timing of approvals, production and deliveries will determine how quickly that pipeline converts into revenue.
HAL’s backlog has already moved sharply higher
The latest order comes after a strong increase in HAL’s existing backlog. CLSA said the company’s order book grew 32% year-on-year to Rs 2.5 lakh crore in the first quarter of FY27.
The brokerage expects HAL’s manufacturing order inflows to grow to about $25 billion during FY26-FY30. Its assessment is that the government’s push for domestic defence production is creating a deeper pipeline for companies capable of designing and manufacturing complex platforms in India.
CLSA also sees HAL’s integrated design-to-production capabilities, market access, after-market business and net cash position as important parts of its long-term investment case.
Earnings growth should strengthen as execution improves
CLSA expects HAL’s revenue to rise from Rs 33,090 crore in FY26 to Rs 37,694 crore in FY27, Rs 44,305 crore in FY28 and Rs 52,754 crore in FY29. Net profit is forecast to increase from Rs 9,076 crore in FY26 to Rs 10,043 crore in FY27, Rs 11,587 crore in FY28 and Rs 13,996 crore in FY29.
The brokerage estimates earnings per share growth of 10.7% in FY27, 15.4% in FY28 and 20.8% in FY29. Return on equity is expected to remain around 24-25% during FY27-FY29.
The key question is therefore not simply whether HAL can win more orders. With the backlog already substantial, execution, production ramp-up and delivery schedules will determine how much of the defence opportunity reaches the company’s financial statements.
Make in India remains a central part of the thesis
CLSA sees HAL as one of the biggest beneficiaries of India’s push towards domestic defence manufacturing. The brokerage’s assessment is that India’s defence modernisation programme, combined with a greater preference for indigenous platforms, is widening HAL’s addressable market.
The report points to opportunities across fighters, helicopters, engines, radars and upgrades. It also notes that HAL operates in an industry with high entry barriers and expects the company to sustain return on equity above 20%.
That breadth gives the company multiple potential sources of future orders. It also reduces the dependence on the timing of any one programme, although individual projects can still face development, approval or execution delays.
CLSA on HAL: ‘Outperform’
CLSA retained its Rs 5,481 target price and ‘Outperform’ rating for HAL. The target is based on five valuation methods, including price-to-earnings comparisons with defence and capital goods companies, enterprise value-to-order-book valuation and a discounted cash flow approach.
Conclusion
There are risks to the view. More than 90% of HAL’s revenue comes from the Indian armed forces, leaving the company exposed to changes in defence budgets and procurement priorities. CLSA also cited possible diversion of spending towards imports, changes in security priorities, delays in LCA production and localisation challenges.
Disclaimer: This article is based on the views, estimates, ratings and target price published by CLSA in its Hindustan Aeronautics report dated September 8, 2026. The information is provided solely for informational and educational purposes and should not be considered investment advice, a recommendation to buy, sell or hold any security, or a substitute for independent financial research. Brokerage estimates, earnings forecasts, target prices and ratings are subject to change and may differ from actual business or market outcomes. Stock market investments are subject to market risks, including the possible loss of principal. Past performance does not guarantee future returns, and projected earnings or returns may not materialise due to changes in economic conditions, company performance, defence budgets, government procurement, regulations, execution schedules, competition, localisation requirements and other factors. Readers should independently assess the information, consider their own financial circumstances, investment objectives and risk tolerance, and consult a qualified financial adviser before making any investment decision. Neither the author nor the publication assumes responsibility for any financial loss arising from reliance on the information presented in this article.