Synopsis:
HAL jumps on reports to sign Rs. 67,000 crore deal for 97 Tejas Mk-1A jets, boosting capacity, backed by a strong order pipeline, GE engine clarity, and CLSA’s ‘Outperform’ rating.
During Thursday’s trading session, shares of a company manufacturing and providing repair & maintenance services for aircraft and helicopters surged nearly 2.2 percent, after reports emerged that the Ministry of Defence is set to sign a Rs. 67,000 crore contract with the company for fighter jets.
At 12:47 p.m., the shares of Hindustan Aeronautics Limited were trading in the green at Rs. 4,774.35 on BSE, up by around 1 percent, as against its previous closing price of Rs. 4,723.45, with a market cap of Rs. 3.19 lakh crores. The stock has delivered negative returns of around 9 percent in one year, and has gained by over 7 percent in the last one month.
What’s the News
As per a few reports, the Ministry of Defence is expected to formally sign a landmark agreement this afternoon with Hindustan Aeronautics Limited (HAL) for the procurement of 97 Tejas Mark-1A fighter aircraft, in a deal estimated at ~Rs. 67,000 crore. This will be the largest-ever contract under the Tejas Mk-1A programme and is anticipated to significantly strengthen the Indian Air Force’s combat capabilities.
The acquisition process has gone through multiple stages of approval: the Defence Acquisition Council (DAC) granted initial clearance on 30th November 2023, the Request for Proposal (RFP) was issued on 13th April 2024, and the Cabinet Committee on Security (CCS) gave its final approval on 19th August 2025. This paves the way for today’s formal signing. Earlier in February 2021, the Defence Ministry signed a Rs. 47,000 crore contract for 83 Tejas aircraft.
Currently, the Tejas Mk-1A fleet is powered by GE-supplied engines, though HAL is steadily increasing the level of indigenous content in future production. The aircraft will be built at HAL’s facilities in Bengaluru and Nashik. To adhere to delivery commitments, HAL is also scaling up its production capacity from 18 to 28 aircraft per year.
Additionally, the global brokerage firm CLSA has initiated coverage on HAL with an ‘outperform’ rating, with a target price of Rs. 5,436 per share, representing a potential upside of nearly 14 percent from its current price levels. The brokerage identifies HAL’s large fighter aircraft order in 2025, along with clarity on GE engine supply agreements, as key growth drivers.
In its research note, CLSA highlighted that HAL recently achieved a significant milestone with the first flight of the 13th LCA Mk-1A aircraft, surpassing its target of 12 deliveries for FY26. This development addresses concerns over possible schedule delays and strengthens confidence in timely execution.
CLSA further noted that GE has committed to supplying 12 engines in 2025 and 20 in 2026, a critical factor for ensuring the completion of aircraft deliveries. The commencement of deliveries for the first two fully armed Mk-1A jets is expected to play a vital role in securing a repeat order worth Rs. 67,000 crore (~$7.8 billion), which could expand HAL’s existing $22 billion order backlog by around 35 percent. The company’s long-term project pipeline remains strong, valued at ~$54 billion.
Financials & More
HAL reported a significant growth in its revenue from operations, showing a year-on-year increase of around 11 percent from Rs. 4,348 crores in Q1 FY25 to Rs. 4,819 crores in Q1 FY26. In contrast, its net profit decreased during the same period from Rs. 1,437 crores to Rs. 1,384 crores, representing a marginal decline of about 4 percent YoY.
As of May 2025, the company reported an order book of Rs. 1,89,300 crores, compared to Rs. 94,127 crores as of April 2024, following the liquidation of the current year’s turnover of Rs. 30,105 crores.
On the profitability front, HAL is targeting an EBITDA margin (including other income) of 38-39 percent, with core operational EBITDA around 31 percent, aiming to sustain these levels over the medium term. The company has set a revenue growth guidance of 8-10 percent for FY26, while management sees the potential for double-digit growth as project execution accelerates.
Hindustan Aeronautics Limited (HAL) is engaged in the business of design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products, including aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.
The company’s operations are organised into five complexes, namely the Bangalore Complex, MiG Complex, Helicopter Complex, Accessories Complex and Design Complex, which together include 21 production divisions and 11 research and design centres (R&D Centres) and 8 support offices located across India.
Written by Shivani Singh
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