ICICI Securities research report on Hindustan Aeronautics
GE Aerospace has delivered the first of 99 (nos.) F404-IN20 engines to HAL for the light combat aircraft Tejas Mk 1A (Delivering for India Today and Into the Future | GE Aerospace News). In our view, this development allays concerns on the execution front. We expect revenue growth of 25–28% through to FY27E, based on the order book (OB) estimated at more than INR 1.3trn. Besides, there are further orders of 97 (nos.) Tejas Mk 1A and 156 (nos.)
Outlook
LCH Prachand in the pipeline. As a result of reduced execution concerns and lower risk on our earnings estimates, we roll back our WACC to 11% (earlier 12%), resulting in a revised TP of INR 5,000 (earlier INR 4,065). We upgrade HAL to BUY (from Add) and recommend it as our top pick among DPSUs.
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