The HAL or Hindustan Aeronautics share price is rallying after its Q1 performance. Motilal Oswal has reiterated Buy with a target price of 5,800 per share. This implies an upside of nearly 32% for the share price from current levels. According to the brokerage house, the stock has come off from highs in the last quarter and is currently trading at “attractive valuations.”
They have listed out that HAL’s growth catalysts are emerging from the Tejas aircraft deliveries and the finalization of orders for 97 Tejas-Mk1A. It has also reported a steady Q1 result with a slight miss on revenue, “which was offset by better-than-expected margins and higher other income,” Motilal Oswal added.
Motilal Oswal on HAL: Tejas a key growth driver
With engine supplies ramping up from GE for the Tejas Mk1A aircraft order, Motilal Oswal expects “aircraft deliveries to accelerate in the coming quarters. We also anticipate a strong manufacturing order book to support its execution growth.”
This is further boosted by the first batch of wing assemblies from L&T, highlighting increasing private-sector collaboration under the Make-in-India initiative. On the engine front, two GE F-404-IN20 engines have already been delivered and one more is expected this month. GE is now targeting to deliver two engines per month October onwards, which will ease earlier bottlenecks and support HAL’s aim to deliver 12 jets in FY26.
HAL has also formally issued a Letter of Intent to Israel’s ELTA Systems for supplying radar and electronic warfare systems, choosing imported technology over the indigenous Uttam AESA radar due to certification delays. “With supply chain challenges now resolved and testing validated, HAL expects a smooth ramp-up in production and deliveries in the years ahead. Our estimates bake in eight aircraft deliveries for FY26 and 16 aircraft from FY27 onwards,” Motilal Oswal pointed out.
Motilal Oswal on HAL: Space sector focus
The other big trigger for HAL is the initiative to strengthen the space sector with ToT for SSLV, as per Motilal Oswal. HAL recently reached a critical milestone in its collaboration with ISRO by securing an INR5b transfer of technology (ToT) deal for the Small Satellite Launch Vehicle (SSLV). This agreement grants HAL full rights to build, own, market, and operate the SSLV, with ISRO providing hand-holding support over the next two years.
Further emphasizing HAL’s expanding role in India’s space sector, the company played a vital part in the July 30 launch of the NASA-ISRO NISAR satellite. They supplied essential components. In the long term, Motilal Oswal expects, “SSLV production will open new commercial avenues for HAL in the rapidly growing global small-satellite launch market, diversify its revenue base beyond aerospace and defence platforms, and position it as a strategic partner for domestic and international space customers.”
They believe that HAL’s this move also “aligns with India’s ambition to expand its space economy to $40 billion by 2040, giving HAL leverage on upcoming satellite constellation and space station projects.”