Synopsis:
HAL’s stock fell 9% after a fatal Tejas fighter jet crash at the Dubai Air Show, triggering safety concerns and sector-wide pressure. Despite the setback, analysts maintain positive long-term views supported by HAL’s strong order pipeline.
This company is engaged in the business of Manufacture of Aircraft and Helicopters and Repair, Maintenance of Aircraft and Helicopters is now in the spotlight after the fatal crash of a Tejas Fighter Jet at Dubai Air show on November 21st.
With market capitalization of Rs. 2,96,776 cr, the shares of Hindustan Aeronautics Ltd are currently trading at Rs. 4,437 per share, dropping by 9% on BSE in today’s market session making a low of Rs. 4,205.25, from its previous close of Rs. 4,595 per share.
What’s the news
The 9% drop in the stock of Hindustan Aeronautics Limited (HAL) today was primarily triggered by the fatal crash of a Tejas fighter jet, which HAL manufactures. This crash occurred during a performance at the Dubai Air Show on November 21, resulting in the death of the Indian Air Force pilot flying the aircraft.
The incident has raised immediate sentiment pressure on HAL shares, causing significant stock price volatility as investors react to concerns about the reliability, operational safety, and export readiness of the indigenous fighter jet.
HAL still holds a strong order book, including large contracts for Tejas Mk1A and Mk2 variants, which supports the company’s long-term fundamentals. Market experts advise that key factors to watch for investors include HAL’s delivery discipline, ability to maintain earnings momentum. Despite the crash-triggered setback, the stock’s long-term importance in India’s defense modernization remains robust.
Several defence stocks came under pressure today, dragging the Nifty Defence index lower by 2 percent. Alongside HAL’s sharp decline, other sector players such as Data Patterns, GRSE, Paras Defence, Zen Tech, BEML and Cochin Shipyard also slipped, each losing around 3 percent.
Clarification about the incident
The company issued a clarification stating that the recent incident involving its aircraft during an aerial display at the Dubai Air Show was an isolated event caused by exceptional circumstances.
The company emphasized that the incident has no impact on its business operations, financials, or future deliveries. HAL is fully cooperating with investigating agencies and will continue to update stakeholders on any significant developments.
About Tejas Aircraft
The Tejas is a lightweight, indigenous 4.5-generation multi-role supersonic fighter aircraft developed by Hindustan Aeronautics Limited. It is designed for versatile combat roles with a maximum speed of Mach 1.8 and a combat range of around 500 kilometers. The aircraft features advanced avionics, a delta wing design, and can carry up to 4,000 kg of weaponry, including precision-guided and air-to-air missiles.
Brokerage Views
Hindustan Aeronautics Limited (HAL) has received positive analyst ratings despite the recent 9% drop in its share price following the Tejas fighter jet crash at the Dubai Air Show.
Elara Capital maintains a ‘Buy’ rating on HAL with a target price of Rs. 5,680, implying around 28% upside from the current levels, noting that the accident is unlikely to impact the company’s orders or deliveries significantly. However, they expect possible delays in Tejas Mk1A exports while domestic orders remain stable.
CLSA has an ‘Outperform’ rating with a target price of Rs. 5,436, reflecting over 22.5% upside potential. They attribute the crash to possible factors like GE engine thrust loss, aerodynamic stall, or pilot error, but emphasize the incident as a rare event in 20+ years of Tejas operation. CLSA views the current volatility as a buying opportunity given HAL’s robust order pipeline and its status as a premier Make-in-India defense company.
Written by Manideep Appana
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