Hindustan Aeronautics Ltd (HAL) saw its share price open over 5% higher on Tuesday following the approval by the Union Cabinet Committee for the procurement of 240 aero-engines for Su-30 MKI aircraft, valued at Rs 26,000 crore. HAL shares surged as much as 5.09% to Rs 4,925.00 apiece at the open on the BSE.
On September 2, 2024, the Cabinet Committee on Security approved the proposal for the acquisition of 240 AL-31FP aero-engines for the Indian Air Force’s (IAF) Su-30 MKI aircraft under the Buy (Indian) category from Hindustan Aeronautics. The total cost of this procurement is set at over Rs 26,000 crore.
According to a statement from the Ministry of Defence, the delivery of these aero-engines will commence one year after the approval and will be completed over a period of eight years. The engines will have an indigenous content of over 54%, enhanced through the indigenisation of key components, and will be manufactured at HAL’s Koraput division.
What Was The Defence Ministry’s Statement?
“Su-30 MKI is one of the most powerful and strategically significant fleets of the IAF. The supply of these aero-engines by HAL will meet the fleet sustenance requirements of the IAF, ensuring their continued operations and strengthening the defence preparedness of the country,” the Ministry of Defence stated.
Antique on HAL
According to a report by Antique, the brokerage maintains a ‘Buy’ rating on Hindustan Aeronautics Limited (HAL) with a target price of Rs 6,145. The report highlights that the recent Cabinet approval for the procurement of Rs 26,000 crore worth of 240 aero engines for SU-30MKI aircraft is a positive development.
HAL’s strong order backlog is expected to provide solid revenue visibility, equivalent to 3.8 times its trailing twelve months (TTM) revenue. However, the report notes that near-term financials may experience some volatility, particularly due to challenges in executing the large Tejas MK I A orders.
Despite these challenges, Antique believes the stock is attractively valued, with the potential for multi-year double-digit earnings growth. Additionally, the report underscores HAL’s robust return ratio profile, exceeding 20%, which further enhances its attractiveness.
HAL Stock Performance in Last One Year
The shares of Hindustan Aeronautics have demonstrated positive returns across various time intervals. In the last month, the stock delivered a positive return of 4.77%. Over the past six months, it exhibited strong momentum with returns of 49.62%, indicating a robust performance.
Year-to-date figures further emphasized the stock’s bullish trend, recording an impressive growth of 70.23%. Looking at the broader horizon, the shares have shown consistent strength, given returns of over 142% in the last year.