HAL share price: 42% upside ahead? Buy 'attractively valued' defence stock, says Antique
Antique Stock Broking suggests a 'Buy' on HAL following CCS approval for additional 97 Tejas Mk-1A aircrafts to boost the order book.
- Aug 22, 2025,
- Updated Aug 22, 2025 10:44 AM IST
Antique Stock Broking has issued a 'Buy' rating for Hindustan Aeronautics Ltd (HAL), a leading defence manufacturer, following a significant development. The Cabinet Committee on Security (CCS) has approved the procurement of an additional 97 Light Combat Aircraft Mk-1A, a move that is set to considerably enhance HAL's order book. The total value of this contract is expected to reach Rs 67,000 crore, potentially pushing HAL’s order book to Rs 2.5 lakh crore upon finalisation.
The brokerage firm highlighted the robust order pipeline that HAL possesses, ensuring strong revenue visibility in both the medium and long term. Despite near-term financial volatility due to supply chain challenges linked to the large Tejas Mk-1A order, Antique Stock Broking maintains a positive outlook. The firm points to HAL’s potential for multi-year double-digit earnings growth and a robust return ratio profile exceeding 20%.
Antique Stock Broking stated, "We believe that the stock is attractively valued and thus retain Buy rating with a target of Rs 6,360, valuing the company at a PE of 40x 1HFY28E earnings."
The target price suggests a 42.15 per cent potential upside over the stock's Thursday's closing price. HAL’s order book at the end of FY25 stood at Rs 1.8 lakh crore, providing a revenue visibility of 6.2 times its trailing twelve-month revenue. The finalisation of the additional Tejas- MK1A order, valued at Rs 67,000 crore, is expected to further boost the order book. This healthy order pipeline includes contracts for ALH, LUH, Su-30, and RD-33 engines, which are in advanced stages of finalisation.
Additionally, the Defence Acquisition Council (DAC) has approved Acceptance of Necessity (AoNs) worth INR 330 billion for Su-30 upgrades, further enhancing HAL’s future prospects. The long-term pipeline remains promising with projects like Tejas MK II, AMCA, TEDBF, and IMRH, potentially offering business opportunities worth INR 4.5 trillion over the next decade.
The successful execution of the Tejas Mk-1A order relies heavily on the consistent supply of the GE 404 engine. HAL has faced challenges over the past two years due to supply issues, but recent reports indicate that GE has started engine deliveries. Meeting the contract's requirement of two engines per month is crucial for order finalisation.
HAL has also taken steps to enhance its production capabilities, adding capacities for LCA, HTT-40, and aero engines. A memorandum of understanding with GE aims to produce GE-F414 fighter jet engines domestically, with an 80 per cent transfer of technology expected to reach full capacity in the next decade. Furthermore, HAL is working jointly with Safran to develop engines for Indian Multi Role Helicopter (IMRH) projects.
Antique Stock Broking has issued a 'Buy' rating for Hindustan Aeronautics Ltd (HAL), a leading defence manufacturer, following a significant development. The Cabinet Committee on Security (CCS) has approved the procurement of an additional 97 Light Combat Aircraft Mk-1A, a move that is set to considerably enhance HAL's order book. The total value of this contract is expected to reach Rs 67,000 crore, potentially pushing HAL’s order book to Rs 2.5 lakh crore upon finalisation.
The brokerage firm highlighted the robust order pipeline that HAL possesses, ensuring strong revenue visibility in both the medium and long term. Despite near-term financial volatility due to supply chain challenges linked to the large Tejas Mk-1A order, Antique Stock Broking maintains a positive outlook. The firm points to HAL’s potential for multi-year double-digit earnings growth and a robust return ratio profile exceeding 20%.
Antique Stock Broking stated, "We believe that the stock is attractively valued and thus retain Buy rating with a target of Rs 6,360, valuing the company at a PE of 40x 1HFY28E earnings."
The target price suggests a 42.15 per cent potential upside over the stock's Thursday's closing price. HAL’s order book at the end of FY25 stood at Rs 1.8 lakh crore, providing a revenue visibility of 6.2 times its trailing twelve-month revenue. The finalisation of the additional Tejas- MK1A order, valued at Rs 67,000 crore, is expected to further boost the order book. This healthy order pipeline includes contracts for ALH, LUH, Su-30, and RD-33 engines, which are in advanced stages of finalisation.
Additionally, the Defence Acquisition Council (DAC) has approved Acceptance of Necessity (AoNs) worth INR 330 billion for Su-30 upgrades, further enhancing HAL’s future prospects. The long-term pipeline remains promising with projects like Tejas MK II, AMCA, TEDBF, and IMRH, potentially offering business opportunities worth INR 4.5 trillion over the next decade.
The successful execution of the Tejas Mk-1A order relies heavily on the consistent supply of the GE 404 engine. HAL has faced challenges over the past two years due to supply issues, but recent reports indicate that GE has started engine deliveries. Meeting the contract's requirement of two engines per month is crucial for order finalisation.
HAL has also taken steps to enhance its production capabilities, adding capacities for LCA, HTT-40, and aero engines. A memorandum of understanding with GE aims to produce GE-F414 fighter jet engines domestically, with an 80 per cent transfer of technology expected to reach full capacity in the next decade. Furthermore, HAL is working jointly with Safran to develop engines for Indian Multi Role Helicopter (IMRH) projects.