Buy Hindustan Aeronautics; target of Rs 5800: Motilal Oswal

Motilal Oswal's research report on Hindustan Aeronautics

Hindustan Aeronautics’ (HAL) 2QFY26 revenue/PAT came in line with our estimates. Lower-than-expected margins were offset by higher other income. During the quarter, the company received a follow-on order of 97 Tejas Mk1A worth INR624b and signed a contract with GE for engine supplies for this project. We await the deliveries of Tejas Mk1A fighter jets as the test flight was already conducted in Oct’25. HAL has a strong order book, which provides good visibility on future execution. We broadly maintain our estimates and TP of INR5,800, based on the average of DCF and 32x Sep’27E earnings. We maintain BUY on HAL. Tejas aircraft deliveries and execution of manufacturing order book will be key drivers for the stock going forward.

Outlook

We broadly maintain our estimates and reiterate our BUY rating on the stock with an unchanged TP of INR5,800, based on the average of DCF and 32x two-year forward earnings.