Listed below is a Defence stock which is the Indian government’s prime manufacturer of defence machinery in the Aeronautic segment, with an outstanding orderbook of Rs. 94,000 Crores and available at a discount of upto xx percent that you can add to your watchlist.
Price Action
With a market capitalization of Rs. 2,81,220 Crores, the shares of Hindustan Aeronautics Limited closed at Rs. 4,205 per equity share, down 0.72 percent from its previous day’s close price of Rs. 4,235.55.
Discount
Hindustan Aeronautics Limited is currently trading at a discount of upto 26 percent from its 52-week high price of Rs. 5,675 and it has delivered a return of 47 percent in one year.
About the Company
Hindustan Aeronautics Limited (HAL) is the Indian government’s prime manufacturer of defence machinery in the Aeronautic segment. It designs, develops, manufactures, maintains, and upgrades aircraft, helicopters, and critical aerospace components & accessories.
It has more than 20 production facilities and 10 sites dedicated to research and development co-located with the production premises. These divisions/centers are spread across nine geographic locations in seven states of the country.
It also has multiple successful partnerships with Air Mauritius, Rolls Royce, Honeywell, and Israel Aerospace. HAL has partnered with Rolls Royce and has ongoing contracts focused on manufacturing and maintaining Adour engines for the aircraft and their components supporting both Indian and international military customers, along with other collaborative research and development.
Orderbook
Hindustan Aeronautics Limited has a strong order book of Rs. 94,000 Crores and the management of the company expects to increase it to Rs. 1,20,000 Crores by the end of the fiscal year.
The future order pipeline of HAL looks promising it is estimated to be somewhere around Rs.1,60,000 – 1,70,000 crores, with anticipated contracts for LCA Mark 1A, Domier Aircrafts,
Utility Helicopter Marine, Advanced Light Helicopter, and many others, and it aims to materialize it in the next 3 years time frame.
Capex
Hindustan Aeronautics Limited (HAL) has plans to invest in various greenfield projects and capacity augmentation of various programs with an estimated CAPEX plan between Rs.14,000 – 15,000 crores for the next 5 years, taking an average CAPEX of almost Rs. 3,000 crores on annual basis.
Financials & Ratios
Its Revenue from operations grew by 7 percent YoY from Rs. 6,105 Crores in Q2FY24 to Rs. 6,519 Crores in Q2FY25, accompanied by profits of Rs. 1,237 Crores to Rs. 1,510.48 Crores.
In terms of Return ratios, it has reported a return on equity (ROE) of 27.3 percent and a return on capital employed (ROCE) of 25.29 percent. It is a debt-free company with a debt-to-equity ratio of 0.
Written by: Bharath K.S
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