Synopsis: Hindustan Aeronautics Limited reports 37.55% QoQ revenue growth and a 20.62% QoQ net profit surge in Q2 FY26 results, and Analysts like Citi (₹5,800), CLSA (₹5,436), and Nomura (₹6,100) stay positive on HAL’s growth.
This PSU Defence Stock, engaged in the design, development, manufacture, repair, overhaul, upgrade, and servicing of aircraft, helicopters, aero-engines, avionics, and aerospace structures, is in focus after the company reported strong September quarterly results, and analysts like Citi, CLSA, and Nomura gave upside potential of up to 28.84 percent.
With a market capitalization of Rs. 3,16,267.04 crore, the shares of Hindustan Aeronautics Limited were currently trading at Rs. 4,734.55 per equity share, down nearly 0.26 percent from its previous day’s close price of Rs. 4,747.05.
Q2 FY26 Result Walkthrough:
Coming into the quarterly results of Hindustan Aeronautics Limited, the company’s consolidated revenue from operations increased by 10.92 percent YOY, from Rs. 5,976.29 crore in Q2 FY25 to Rs. 6,628.61 crore in Q2 FY26, and increased by 37.55 percent QoQ from Rs. 4,819.01 crore in Q1 FY26.
In Q2 FY26, Hindustan Aeronautics Limited’s consolidated net profit increased by 10.50 percent YOY, reaching Rs. 1,669.05 crore compared to Rs. 1,510.49 crore during the same period last year. As compared to Q1 FY26, the net profit has increased by 20.62 percent, from Rs. 1,383.77 crore.
The basic earnings per share increased by 10.49 percent and stood at Rs. 24.96 as against Rs. 22.59 recorded in the same quarter in the previous year, FY2025.
Hindustan Aeronautics Limited’s revenue and net profit have grown at a CAGR of 7.64 percent and 23.74 percent, respectively, over the last five years.
In terms of return ratios, the company’s ROCE and ROE stand at 33.9 percent and 26.1 percent, respectively. Hindustan Aeronautics Limited has an earnings per share (EPS) of Rs. 124, and it’s an almost debt-free company.
Analyst Viewpoint:
Citi, a prominent brokerage firm, has recommended a “Buy” call on Hindustan Aeronautics Limited with a target price of Rs. 5,800 per share, indicating an upside potential of 22.50 percent.
Citi believes HAL’s growth will improve as production delays, especially for Tejas aircraft. Although the EBITDA margin for the first half of FY26 stood at 24.8 percent compared to 25.5 percent in the same period last year, HAL’s strong sales pipeline and manufacturing momentum are expected to boost performance in the coming quarters.
The brokerage finds HAL’s stock fairly valued, trading at around seven times trailing twelve months (TTM) sales. With a healthy order backlog, strong return on equity (ROE), and growing revenue visibility, Citi expects steady earnings improvement, justifying its positive target and continued confidence in HAL’s long-term prospects.
Further, CLSA, a prominent brokerage firm, has recommended a “Outperform” call on Hindustan Aeronautics Limited with a target price of Rs. 5,436 per share, indicating an upside potential of 14.52 percent.
CLSA is positive on HAL, highlighting that the recent large fighter aircraft order and the upcoming GE engine co-production deal are major growth drivers. HAL’s cash reserves rose 55 percent year-on-year to $4.5 billion, increasing treasury income by 63 percent. With a strong $54 billion order pipeline, the company’s long-term growth outlook remains solid..
Additionally, Nomura, a prominent brokerage firm, has recommended a “Buy” call on Hindustan Aeronautics Limited with a target price of Rs. 6,100 per share, indicating an upside potential of 28.84 percent.
Nomura has a positive outlook on HAL, expecting its earnings per share (EPS) to grow at a strong 24 percent compound annual growth rate (CAGR) between FY25 and FY28.
The brokerage values HAL’s manufacturing book-to-bill ratio at 31 times FY25 sales, reflecting solid revenue visibility. It also noted that the stock trades at 29 times FY27 and 23 times FY28 forward EPS, indicating sustained earnings growth potential.
Order Book:
As of FY25, Hindustan Aeronautics Limited’s order book stands at Rs. 1,89,300 crore, marking a strong 101.11 percent increase from Rs. 94,127 crore as of April 1, 2024, driven by significant new defence and aerospace project orders. This growth was driven by the addition of new orders worth Rs. 1.25 lakh crore during the year.
Company Overview:
Hindustan Aeronautics Limited (HAL) was established in 1940 in Bengaluru and is a leading Indian aerospace and defence company. It began as Hindustan Aircraft Limited to create indigenous aircraft capabilities in India. Over time, it has evolved into a major producer of military and civilian aircraft and aerospace technologies.
The company specializes in designing, manufacturing, and maintaining a range of aircraft, helicopters, engines, and avionics systems. HAL produces fighter jets like the indigenous HAL Tejas, trainer aircraft, transport planes, and helicopters, including the HAL Dhruv and Light Combat Helicopter. It also contributes to India’s space programs by supplying components for rockets and satellites.
Written By – Nikhil Naik
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