ICICI Securities's research report on Hindustan Aeronautics
Hindustan Aeronautics’ (HAL) Q2FY26 performance was impacted by higher provisioning and an upsurge in other expenditure leading to 70bps/310bps correction in EBITDA margin to 23.5% with EBITDA of INR 15.6bn (-5%/+21% YoY/QoQ). HAL, at present, is sitting on its highest-ever orderbook of INR 2.5-2.6trn post receiving the additional order for 97nos LCA Mk1A worth INR 624bn. The company added another feather by signing MoU for production of SJ-100 in India. Though the company inaugurated third production line of LCA Mk1A and second line of HTT-40, non-availability of engines is plaguing execution. Going forward, ramp-up in execution could remain a key monitorable.
Outlook
We maintain BUY with TP of INR 5,725 based on 35x FY28E EPS (previously 40x FY27E EPS) down from INR 5,800 (re-adjusted for lower Tejas delivery).
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