Buy Hindustan Aeronautics; target of Rs 5650: Motilal Oswal

Motilal Oswal is bullish on Hindustan Aeronautics recommended buy rating on the stock with a target price of Rs 5650 in its research report dated May 18, 2025.

Broker Research

May 20, 2025 / 10:45 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Hindustan Aeronautics

HAL reported a better-than-expected FY25 performance, driven by improved margins on the back of lower provisions. The company ended the year with a robust order book of INR1.8t, clocking inflows of INR1t. With engine supplies from GE, HAL is optimistic about delivering 12 Tejas Mk1A aircraft during the year along with the execution of other projects. Management provided a conservative guidance of 8-10% revenue growth, taking into account certain contract amendments, and it will revisit this guidance after six months. Our estimates build in healthy execution of the manufacturing order book. We revise our estimates upwards by 12%/4% and roll forward our TP to INR5,650 based on the average of DCF and 32x Jun’27E earnings. Since our initiation in Apr’25, the stock has moved up 27% due to the current geopolitical issues across the border. We are still constructive on the overall defense space, but the recent rally has been too sharp. While we reiterate our BUY rating, we would wait for better entry points as we acknowledge that risk-reward is not favorable at this point.

Outlook

HAL is currently trading at 36.3x/31.8x FY26E/FY27E EPS. We revise our estimates upwards by 12%/4% and roll forward our TP to INR5,650 based on the average of DCF and 32x Jun’27E earnings. Reiterate BUY.

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