Brokerages see up to 24% upside for HAL shares despite Tejas fighter jet crash in Dubai: Here's why

The shares of Hindustan Aeronautics (HAL) still hold strong upside potential despite seeing some short-term volatility after the Tejas fighter crash in Dubai last week, said analysts. This comes as shares of the Indian PSU company sank up to 9 percent on BSE Monday.

HAL shares fell to an intraday-low of Rs 4,205.25 apiece on BSE in the morning trading hours of November 24, the lowest level seen by the stock in more than 7 months. The stock then recovered some losses to close more than 3 percent lower at Rs 4,443 apiece.

Tejas fighter jet crash:

The fighter jet crashed while performing manoeuvres in front of a large audience in the afternoon of November 21, causing the death of IAF pilot Wing Commander Namansh Syal. Videos circulating online show the jet, which was a single-seat light combat aircraft (LCA), plunging down to the ground and flames erupting immediately at the site.

A plume of black smoke rose above Al Maktoum International Airport at Dubai World Central, drawing the attention of onlookers as sirens rang out in the aftermath of the crash. The IAF, in a statement, confirmed the death of pilot in the crash.

The incident marks the second case involving a Tejas aircraft in less than two years.

HAL share price: Should you buy, sell or hold?

Elara Capital kept a 'Buy' call on HAL shares, with a target price of Rs 5,680 per share. This implies an upside potential of nearly 24 percent from the stock's previous closing price. The domestic brokerage noted that the accident is expected to have no major financial impact is on company orders or deliveries.

It, however, added that Tejas Mk 1A exports may be delayed despite stable domestic orders.

Target markets included Asia, Africa, and Latin America, and HAL also opened an office in Malaysia in 2023.

CLSA kept an 'Outperform' call on the stock, with a target price of Rs 5,436. This implies an upside potential of more than 18 percent from the stock's previous closing price. Citing experts, the international brokerage said that the possible causes of the incident include General Electric's GE engine thrust loss, aerodynamic stall effects, or human error.

CLSA sees volatility as a chance to accumulate due to HAL's $54 billion pipeline.

Choice Institutional Equities kept a 'Buy' call on the stock, with a target price of Rs 5,570 apiece. This implies an upside potential of more than 21 percent from the stock's previous closing price.

The domestic brokerage noted that the tragic incident was caused by a Negative-G manoeuvre, according to initial experts' assessment, while Court of Inquiry by the IAF has been constituted to determine the exact cause of the accident.

'Accidents are a recognised operational risk'

"The Tejas programme is highly advanced; very few countries have successfully developed an indigenous light combat aircraft of this complexity. During training periods or high-intensity demonstration flights, accidents, though rare, are a recognised operational risk. This event, we believe, should be viewed in the broader context of the programme’s overall safety record, steady progress and continued delivery momentum,” Choice said.

It added that HAL’s Tejas mishap falls within the normal risk envelope, and its accident ratio remains among the lowest in modern fighters. “We believe that the impact on short-term sentiment is not indicative of systemic programme failure,” it concluded.

Such a public loss will inevitably overshadow India's efforts to establish the jet abroad after a painstaking development over four decades, experts quoted by Reuters said.

"A crash sends quite the opposite signal: a dramatic failure," Douglas A. Birkey, executive director of the U.S.-based Mitchell Institute for Aerospace Studies told Reuters, adding however that while the Tejas would suffer negative publicity, it would most likely regain momentum.

A former HAL executive who left the company recently was quoted by Reuters as saying that the crash in Dubai "rules out exports for now". "The focus for the coming years would be on boosting production of the fighter for domestic use," the former executive said.

"The Tejas crash and headlines around a potential Russia–Ukraine peace deal are clearly weighing on investor sentiment, triggering short-term volatility in defence stocks. But structurally, the narrative hasn’t changed — India’s defence manufacturers continue to benefit from strong order books, indigenisation policies, and export ambitions. While risk perception is elevated now, these are strategic, long-duration plays. If HAL and peers deliver on execution and communicate clearly, this phase may end up being a buying opportunity rather than a lasting drag on valuations," said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara.

HAL share price: Technical view

HAL is currently trading in a consolidative structure, moving within a broad descending channel marked by falling trendline resistance on the upside, said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.

The analyst noted that the stock continues to struggle near the Rs 4,900–4,850 zone, which remains a strong supply area as visible from repeated rejections. On the downside, the Rs 4,500–4,450 zone is acting as a crucial support band, aligned with horizontal support and the 200-day moving average, making it an important level for traders to watch. Price action shows short-term weakness as HAL trades below key short-term moving averages (20-DMA and 50-DMA), signalling loss of momentum, he added.

HAL's RSI is hovering around mid-range without showing strong directional bias, while MACD remains in a negative crossover, indicating continued bearish undertone. "Unless HAL breaks above the falling trendline and sustains beyond Rs 4,900, upside will likely remain capped. A breakdown below Rs 4,450 may trigger further weakness toward Rs 4,300," Gour added.

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(With inputs from agencies)

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