HAL surges 2% on contract with Argentinian Air Force

Hindustan Aeronautics | CMP: Rs 1,805 | The stock gained over 4 percent on June 21. A meeting of the board of directors of Hindustan Aeronautics will be held on June 28, 2022, to consider, the recommendation of final dividend for the financial year 2021-22, the company said in an exchange filing.

Hindustan Aeronautics Ltd (HAL) share price has risen after the company signed a contract with Argentinian Air Force. At 11:30 am, shares of the defence company were trading at Rs 2534.45, up 2 percent on the BSE.

The scrip has shot up 86 percent in the past year while it has jumped over 230 percent in the past three years.

The contract with the Argentinian Air Force is for the supply of spares and engine repair of legacy two-tonne class helicopters.

HAL is the largest defence Public Sector Undertaking (PSU) in India. It is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of aerospace products including aircraft, helicopters, aero-engines, avionics, accessories, and aerospace structures.

ICICI Securities remains confident about the company and has retained its ‘buy’ rating on the stock. It has a value on HAL at Rs 3,300, which is 20 times PE on FY25 EPS (Earnings Per Share).

The company has a healthy order book position of Rs 84,000 crore, which is 3.2 times trailing twelve-month (TTM) revenues, led by large-scale orders in aircraft and helicopter manufacturing, according to the brokerage firm.

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The government’s focus on the defence sector, as evident from the nearly 7 percent hike in Indian defence sector capex, is expected to benefit several defence companies, including HAL.

The traction in defence orders is already visible with Bharat Dynamics soaring over 9 percent in reaction to the company’s announcement that it has signed 10 agreements with renowned foreign and Indian companies at the Aero India-2023 event in Bengaluru.

Even Bharat Electronics has also signed an agreement with Goa Shipyard for cooperation over the supply of products such as autonomous boats and other systems based on artificial intelligence for naval platforms. The stock opened 2 percent higher but erased initial gains soon and is now trading flat.