Wednesday, September 04, 2024 – Shares of Hindustan Aeronautics Limited (HAL) have been making headlines after the Cabinet Committee on Security cleared a Rs 26,000 crore order for 240 aero engines to be used in Sukhoi SU-30 MKI aircraft. This move is expected to significantly boost HAL’s order backlog, which is already at a record high of Rs 94,000 crore.
According to Antique Stock Broking, the new order will increase HAL’s order backlog to a staggering Rs 1.2 lakh crore, providing strong revenue visibility of 3.8 times its trailing 12-month revenue. This news has sent HAL’s share price soaring, with the stock closing at Rs 4,787.70 on the BSE, up 3% from the previous day’s close.
Main Points
HAL’s share price has been on a rollercoaster ride in recent months, with the stock delivering a return of 48% in the last six months and 138% over the past 12 months. However, it has posted a negative return of 11% in the last three months.
From a fundamental perspective, HAL’s key financial ratios paint a positive picture. The company has a PE ratio of 38.78 and an EPS (TTM) of Rs 123.27. Its market capitalization stands at a whopping Rs 3,17,407 crore, making it the top-ranked company in the sectoral market capitalization.
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Several factors have contributed to HAL’s share price performance in recent times. The company’s strong order book, which is now set to grow even further with the Sukhoi engine order, has been a major driver. Additionally, HAL’s focus on indigenization and its partnerships with global players like GE and Safran have instilled confidence in investors.
The company’s financial performance has also been impressive, with HAL reporting a consolidated net profit of Rs 1,437 crore for Q1 FY24, a 77% increase from Rs 814 crore a year ago. Revenue from operations also grew 11% YoY to Rs 4,347 crore.
Predicted Price Action and Analysts’ Recommendations
Analysts remain bullish on HAL’s future prospects. Antique Stock Broking has maintained a BUY rating on the stock with a target price of Rs 6,145, valuing the company at a PE ratio of 45x 1HFY27E earnings. The brokerage firm believes that HAL’s multi-year double-digit earnings growth potential and robust return ratio profile of over 20% make the stock attractively valued.
Other analysts are also positive on HAL’s outlook. The HAL management expects FY25 revenue to grow at 13% YoY on a rise in manufacturing sales, as it sees delivery of Tejas Mk 1A from September quarter onwards. The company is also working on a joint venture with Safran to co-develop and co-produce turboshaft engines in India, focusing on the Indian Multi Role Helicopter (IMRH) and Deck-Based Multi-Role Helicopters (DBMRH).
Today’s Update and Important Levels
HAL’s share price opened at Rs 4,787.70 on the BSE and touched an intraday high of Rs 4,900. The stock is currently trading near its 52-week high of Rs 5,674.75. Investors will be closely watching the stock’s performance in the coming days, as it aims to breach the crucial Rs 5,000 mark.
