Buy Hindustan Aeronautics; target of Rs 5470: Geojit Financial Services

Geojit Financial Services is bullish on Hindustan Aeronautics has recommended buy rating on the stock with a target price of Rs 5470 in its research report dated December 03, 2024.

Broker Research

December 04, 2024 / 12:21 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Geojit Financial Services research report on Hindustan Aeronautics

Hindustan Aeronautics Limited (HAL), a Maharatna aerospace and defense PSU, engages in the design, development, manufacturing, repair, overhaul, upgrade, and servicing of aircraft, helicopters, aero-engines, avionics and accessories. The major business segments are Manufacturing (~46% of FY24 sales), services (~47% of sales) and Others (~7% of sales). In H1FY25, revenue grew ~8%YoY to Rs.10,324cr, driven by continued execution in the manufacturing segment and steady growth in Repair & Overhaul (RoH) segment. However, supply side challenges persist on account of delays in engine delivery from GE (General Electric Co.) for its Tejas MkIA fighter aircraft. EBITDA margins stood at ~ 25% in H1FY25 (up by 20 bps YoY) and in Q2FY25 came in at 27% owing to a better revenue mix in favour of RoH. PAT grew ~43%YoY in H1FY25 to Rs. 2,926cr, led by better operating performance. The current order book is estimated to be at ~Rs 1.2 lakh crore (3.5x FY25E revenue), providing healthy revenue growth visibility over FY25-27E. Revenue/EBITDA/PAT are expected to grow at 15%/14%/13% CAGR (as per Bloomberg consensus) over FY24-26E, backed by normalisation of supply side challenges, pick up in execution of existing order backlog, a robust order pipeline, and better operating leverage. HAL’s long term growth story is intact, driven by Govt’s push on indigenous procurement of defense aircraft, robust order pipeline and proven execution capabilities.

Outlook

As per Bloomberg consensus, the stock is currently trading at a 1 yr fwd. P/E of 38.7x with a strong return profile of ~29% (FY24).

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