Brokerages bullish on Hindustan Aeronautics on delivery of engines for Tejas MK 1A; stock up 30% in one month

Over the past month, HAL's stock has rallied nearly 30 percent.

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26 Aug, 2025 12:21

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Brokerages reiterated their bullishness on state-run defense player Hindustan Aeronautics Ltd. (HAL) after GE Aerospace announced that it has delivered the first of the 99 F404-IN20 engines for the Tejas Light Combat Aircraft Mk 1A fight jet.

The supply of the engines was supposed to start by 2023, according to the Rs 5,375 crore-deal signed between the two companies in 2021.

Global broking house JPMorgan believes that shares of HAL can run up a further 20 percent from the current market price. The brokerage said that the delayed delivery of engines was a key overhang on HAL. With the delivery starting, the overhang has been lifted.

The international brokerage has a target price of Rs 4,958 on Hindustan Aeronautics shares, with an 'overweight' rating. Further, the brokerage believes that HAL enjoys a near monopoly in the segment, therefore furthering the bullish outlook.

At 12.50 pm, shares of HAL were quoting Rs 4,175.1, higher by over one percent on the NSE. Over the past month, the stock has rallied nearly 30 percent.

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"We see this is a vital development that allays execution risk concerns," said ICICI Securities. At Aero India, HAL said it expects to receive 12 F404-IN20 engines for the LCA Mk 1A this year. While it has the capacity to produce 24 Tejas Mk 1A aircraft annually, production is expected to gradually increase from 10 in FY26 to 24 by FY30, the brokerage added.

ICICI Securities upgraded shares of HAL to 'buy', from 'add' earlier, bumping up its target price to Rs 5,000 per share, up from Rs 4,065 earlier. This move comes "as a result of reduced execution concerns and lower risk on earnings estimates."

The US-headquartered GE Aerospace said its F404-IN20 engine was selected for the single-engine Tejas in 2004, after collaborating with the Aeronautical Development Agency in the 1980s. "This was an important breakthrough for both India and GE Aerospace," the company added.

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