Shares of this aerospace stock engaged in the manufacturing and maintenance of aircraft and helicopters surged more than 5 percent after receiving an order worth Rs.26,000 crore for the procurement of aerospace engines.
Price Variation
In Tuesday’s trading session, Hindustan Aeronautics Limited’s share price soared 5.09 percent to an intra-day high of Rs.4,925 per share, up from the previous close of Rs.4,686.1 apiece. The stock has since retreated to Rs.4,810.3 per share.
What happened
On September 2, 2024, Hindustan Aeronautics Limited (HAL) received an order for 240 AL-31FP aero-engines for the Indian Air Force’s Su-30 MKI aircraft, as approved by the Cabinet Committee on Security.
HAL will supply these engines under the Buy (Indian) category at a cost of over Rs.26,000 crore, including taxes and duties. Deliveries will start in one year and conclude over eight years.
With over 54 percent indigenous content, boosted by the indigenization of key components, these engines will be manufactured at HAL’s Koraput division.
The Su-30 MKI, a critical asset in the IAF’s fleet, will benefit from these engines, ensuring continued operations and bolstering the nation’s defense capabilities.
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Order Book
This order is expected to significantly bolster HAL’s already strong order backlog, which stood at Rs 94,000 crore at the end of FY24, bringing it to Rs 1.2 lakh crore,
Target Recommendations
CLSA, a reputed brokerage firm has given HAL a ‘buy’ rating with a target of Rs.5,725 per share with an upside potential of 19 percent, expecting double-digit growth and improved margins in the second half of the fiscal year.
Renowned brokerages, UBS and ICICI Direct have given HAL a buy call with a target price of Rs.5,700 per share, an upside potential of 18.49 percent.
Financial Overview
Turning towards the financials of the company, Hindustan Aeronautics Limited reported Q1 FY25 revenue of Rs.4,348 crore, up 11.06 percent from Rs.3,915 crore in the same quarter last year. Profit After Tax (PAT) increased by 76.5 percent to Rs.1,437 crore, compared to Rs.814 crore in the same period.
Company Profile
Hindustan Aeronautics Limited (HAL) is an aerospace and defense firm that designs, manufactures, and supplies aircraft, helicopters, and other equipment. HAL plays a crucial role as a supplier of aviation equipment for India’s defense program.
Written by – Siddesh S Raskar
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