Shares of Hindustan Aeronautics (HAL) rallied 5 percent to hit a fresh 52-week high of Rs 2,498 on December 1 after the Defence Acquisition Council (DAC) approved the procurement of light combat helicopter (LCH) for the Air Force and the Army. The S&P BSE Sensex was up 279 points or 0.4 percent to 67,267 levels as of 9:20am.
In the past one month, the HAL stock has surged over 29 percent as against a 5 percent rise in the benchmark Sensex.
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In an exchange filing on November 30, HAL added that DAC has also accorded for upgradation of SU-30 MKI aircraft indigenously.
That apart, the DAC accorded acceptance of necessity (AON) for various capital acquisition proposals amounting to Rs 2.23 lakh crore, of which acquisition worth Rs 2.2 lakh crore will be sourced from domestic industries.
"This will give a substantial boost to the Indian defence industry towards the aim of achieving the goal of ‘Aatmanirbharta’," the government said.
Further to maximise indigenisation, the DAC has accorded approval for a major amendment in the Defence Acquisition Procedure (DAP) 2020. It has been decided that henceforth, in all categories of procurement cases, minimum 50 percent of indigenous content shall be in the form of material, components and software that are manufactured in India.
Also read: Hindustan Aeronautics: Strong earnings visibility and order pipeline to support stock valuation
Analysts at Morgan Stanley shared an 'overweight' rating for HAL, with a target price of Rs 2,182 per share.
"The combined HAL produces are estimated to be approximately around Rs 1.1 lakh crore. This value includes 97 units of LCA MK-1A 156 units of LCH and 12 units of SU-30 MKI upgrades. The clarity on ordering and execution time-lines are yet to come," the brokerage firm added.
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