HAL share price in focus as Centre clears Rs 62,000-crore Tejas Mark 1A deal
HAL is set to deliver the first LCA Tejas Mk1A to the IAF in coming months and has already received the second F-404 engine from GE, with 10 more scheduled for delivery this fiscal.
- Aug 20, 2025,
- Updated Aug 20, 2025 7:54 AM IST
Defence PSU stock Hindustan Aeronautics Ltd (HAL) is in focus on Wednesday morning after the Centre reportedly cleared the procurement of 97 LCA Tejas Mark 1A fighter jets for the Indian Air Force at a cost of Rs 62,000 crore. The approval, granted during a high-level meeting, paved the way for HAL to start production, defence sources told ANI.
This is the second major order for the Mark 1A variant. The first, placed a few years ago, was for 83 aircraft valued at about Rs 48,000 crore. With the latest approval, the Indian Air Force’s total order for LCA Tejas Mark 1A jets rises to 180.
In a note on August 13, Choice Institutional Equities noted that while HAL has now completed assembly of 11 single-seat Tejas Mk1A fighters -- 10 at Bengaluru, 1 at Nashik; and 9 trainer variants -- taking the total to 19 fully-built airframes, the main constraint remains engine supply.
"To date, only two GE engines have been received; however, we expect the pace to pick up with an additional 10 engines likely to arrive by December 2025. Despite recent India–US trade tension, we believe this supply will go through as per contractual obligations, particularly since the engine in question is an older generation model with no export restrictions of strategic concern," it said.
The brokerage said it remained constructive on HAL's medium-term growth trajectory. "In our assessment, the Tejas Mk1A delivery schedule will be a key investor watchpoint in the coming quarters. However, given the recent correction in the stock, we upgrade our rating to BUY (from ADD). We revise our estimates and maintain our target price at INR 5,570, valuing the stock at 35x of the average of FY27/28E EPS," it said.
PL Capital said HAL is set to deliver the first LCA Tejas Mk1A to the IAF in coming months and has already received the second F-404 engine from GE, with 10 more scheduled for delivery this fiscal.
The plan to procure an additional 97 LCA Tejas Mk1A aircraft from HAL further enhances long-term revenue visibility, the brokerage said.
"Additionally, the recent contract to manufacture the SSLV developed by ISRO marks HAL’s strategic entry into the space technology domain, diversifying its portfolio and opening up new growth avenues. The stock is currently trading at a P/E of 34.8x/32.1x on FY26/27E earnings. We upgrade the stock from ‘Accumulate’ to ‘Buy’ given the recent correction in the stock price and value the stock at a PE of 40x Mar’27E (same as earlier) arriving at a TP of Rs5,500 (same as earlier)," it said.
Defence PSU stock Hindustan Aeronautics Ltd (HAL) is in focus on Wednesday morning after the Centre reportedly cleared the procurement of 97 LCA Tejas Mark 1A fighter jets for the Indian Air Force at a cost of Rs 62,000 crore. The approval, granted during a high-level meeting, paved the way for HAL to start production, defence sources told ANI.
This is the second major order for the Mark 1A variant. The first, placed a few years ago, was for 83 aircraft valued at about Rs 48,000 crore. With the latest approval, the Indian Air Force’s total order for LCA Tejas Mark 1A jets rises to 180.
In a note on August 13, Choice Institutional Equities noted that while HAL has now completed assembly of 11 single-seat Tejas Mk1A fighters -- 10 at Bengaluru, 1 at Nashik; and 9 trainer variants -- taking the total to 19 fully-built airframes, the main constraint remains engine supply.
"To date, only two GE engines have been received; however, we expect the pace to pick up with an additional 10 engines likely to arrive by December 2025. Despite recent India–US trade tension, we believe this supply will go through as per contractual obligations, particularly since the engine in question is an older generation model with no export restrictions of strategic concern," it said.
The brokerage said it remained constructive on HAL's medium-term growth trajectory. "In our assessment, the Tejas Mk1A delivery schedule will be a key investor watchpoint in the coming quarters. However, given the recent correction in the stock, we upgrade our rating to BUY (from ADD). We revise our estimates and maintain our target price at INR 5,570, valuing the stock at 35x of the average of FY27/28E EPS," it said.
PL Capital said HAL is set to deliver the first LCA Tejas Mk1A to the IAF in coming months and has already received the second F-404 engine from GE, with 10 more scheduled for delivery this fiscal.
The plan to procure an additional 97 LCA Tejas Mk1A aircraft from HAL further enhances long-term revenue visibility, the brokerage said.
"Additionally, the recent contract to manufacture the SSLV developed by ISRO marks HAL’s strategic entry into the space technology domain, diversifying its portfolio and opening up new growth avenues. The stock is currently trading at a P/E of 34.8x/32.1x on FY26/27E earnings. We upgrade the stock from ‘Accumulate’ to ‘Buy’ given the recent correction in the stock price and value the stock at a PE of 40x Mar’27E (same as earlier) arriving at a TP of Rs5,500 (same as earlier)," it said.