Shares of Hindustan Aeronautics Limited (HAL) climbed 2.28% to Rs 4,201.00 in early trade on Monday, following a fresh coverage report from Motilal Oswal that rated the stock a ‘Buy’ with a target price of Rs 5,100. This suggests an upside of nearly 26% from the last traded price of Rs 4,031.
The brokerage highlighted HAL’s leadership in aerospace and defense with a robust order book worth Rs 1.8 lakh crore as of March 2025, and a strong future pipeline of Rs 6 lakh crore. Revenue is expected to grow 29% annually from FY25 to FY27, led by ramp-up in manufacturing operations.
Margins are projected to improve steadily, with EBITDA margins estimated at 25.9% in FY25, 27.4% in FY26, and 27.6% in FY27. This improvement is expected to be driven by the company’s focused indigenisation efforts and better operating leverage.
Motilal Oswal also forecasts profit to grow at an annual rate of 29% over the same period, supported by consistent revenues and a healthy order inflow. Return ratios are likely to remain strong, with RoE and RoCE expected to reach 22.5% and 23.2% respectively by FY27.
Key triggers include the finalisation of large-scale orders for Tejas Mk1A, Mk-II, LUH, and the AMCA programs, as well as the resumption of engine supplies from GE that could accelerate deliveries.
However, the brokerage flagged a few risks including possible delays in order finalisations and payments from the Ministry of Defence, as well as increasing competition from private sector players.
At current valuations, HAL is trading at 31.9x and 25.9x its estimated EPS for FY26 and FY27, respectively. Of the 17 analysts tracking the stock, 16 have a ‘Buy’ rating, reflecting strong market confidence.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
