Prabhudas Lilladher's research report on Hindustan Aeronautics
HAL is a play on the growing strength & modernization of India’s air defence given 1) its position as the primary supplier of India’s military aircraft, 2) longterm sustainable demand opportunity, owing to the government’s push on procurement of indigenous defence aircraft, 3) leap in HAL’s technological capabilities due to development of more advanced platforms (Tejas, AMCA, etc.), 4) robust order book of Rs818bn with further 5-year pipeline of ~Rs2trn, and 5) improvement in profitability through scale and operating leverage. We estimate Revenue/Adj. PAT CAGR of 11.0%/14.2% over FY23-26E. The stock is currently trading at a P/E of 20.8x/18.3x on FY25/26E earnings. Initiate ‘BUY.
Outlook
We initiate coverage on Hindustan Aeronautics (HAL) with a ‘BUY rating at a target price of R 2,266 (weighted average of prices using DCF & PE multiple).
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