Synopsis: Defence stock remains attractive with a Rs 5,175 target implying 40% upside, supported by a strong Rs 2.5 lakh crore backlog and Rs 2.54 lakh crore order book. Expected $25 billion inflows, Mk1A deliveries, and expanding platforms strengthen long-term visibility despite near-term execution challenges and moderate growth trajectory.
India’s defence sector is gaining strong momentum, with the FY27 budget allocating around Rs 7.85 lakh crore, nearly 2% of GDP. Capital expenditure has exceeded Rs 2.19 lakh crore, while domestic production is nearing Rs 1.75 lakh crore. Moreover, defence exports are expected to reach Rs 29,000 crore by April 2026, highlighting rising self-reliance and global competitiveness.
With a market capitalisation of Rs 2,46,574.00 crore, the shares of Hindustan Aeronautics Ltd closed at Rs 3,686.95 per share, increased around 0.44 percent as compared to the previous closing price of Rs 3,670.75 apiece.
Brokerage Recommendation
CLSA has maintained a positive stance on the defence stock, assigning an ‘Outperform’ rating with a target price of Rs 5,175. This implies a potential upside of 40% from the current level of Rs 3,686.95, reflecting confidence in the company’s strong order pipeline, sector tailwinds, and long-term growth prospects.
As per the brokerage, HAL maintains a strong growth outlook supported by a robust order backlog of Rs 2.5 lakh crore, offering revenue visibility of nearly 14 years based on FY27 estimates. Additionally, expected order inflows of around $25 billion over FY27–30, driven by helicopters, fighter jets, and the Super Sukhoi programme, further strengthen long-term prospects.
Moreover, key catalysts include the commencement of Mk1A fighter deliveries in Q1FY27, improving clarity on GE engine supplies, and progress on the GE 414 MII deal. However, EPS estimates for FY26–28 have been cut by 3%–6% due to potential engine delays, though the company remains well-positioned within the defence sector.
Furthermore, HAL reported FY26 revenue of Rs 32,250 crore, reflecting a modest 4% year-on-year growth, lower than its earlier 8%–10% guidance. Despite this, the order book rose significantly to Rs 2.54 lakh crore from Rs 1.89 lakh crore, indicating strong demand visibility and reinforcing confidence in sustained growth ahead.
Other Highlights
The company operates through five major complexes across India, comprising 21 divisions and nine R&D centres. It is supported by 12 joint ventures, seven Section-8 companies, and two subsidiaries. With strong indigenous design capabilities, it has developed 17 aircraft in-house and manufactured 14 under licensed technology partnerships.
Its primary customers are the Indian Air Force, Army, Navy, and Coast Guard, serving them for over five decades. The company plays a crucial role in strengthening India’s defence preparedness. It has also exported products and services to multiple countries and is actively working to expand its global footprint.
Currently, it manufactures platforms such as LCA Tejas Mk1A, HTT-40, Dhruv ALH, LCH, and LUH, along with engines and avionics. Production lines for Su-30 MKI and Hawk trainers are also in place. Upcoming projects include naval helicopters, advanced LCA variants, and the Combat Air Teaming System.
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