Antique has issued a “Buy” recommendation on Hindustan Aeronautics Limited (HAL) with a target price of ₹6,145 per share. The brokerage’s optimistic outlook is rooted in the recent approval by the Indian Cabinet of a ₹26,000 crore order for 240 aero engines for the Su-30 MKI aircraft. This significant order is set to further strengthen HAL’s existing order backlog, which stood at ₹94,000 crore at the end of FY24, bringing the total to a robust ₹1.2 lakh crore.
This growing order book provides strong revenue visibility, equating to approximately 3.8 times HAL’s trailing twelve months (TTM) revenue. However, the report notes that near-term financials might exhibit some volatility, primarily due to execution challenges, particularly concerning the large orders for the Tejas Mk I A aircraft. These challenges could affect the company’s ability to meet deadlines and maintain consistent revenue streams in the short term.
Despite these concerns, Antique believes that HAL’s stock is attractively valued, with the potential for multi-year double-digit earnings growth. The company’s robust return ratio profile, with a return on equity (ROE) exceeding 20%, further supports the positive outlook.
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