This defence stock is most consistent, best all-rounder wealth creator; worth buying?
B&K Securities this week initiated coverage on Hindustan Aeronautics with a 'Buy' and a target price of Rs 5,610. India’s defence-aerospace landscape is at an inflection point, it said.
- Dec 12, 2025,
- Updated Dec 12, 2025 12:38 PM IST
Hindustan Aeronautics Ltd (HAL) has emerged as the most consistent wealth creator in MOFSL's Wealth study 2025, beating the likes of Welspun Corp, Bharat Dynamics and Indian Bank, as the stock outperformed the Nifty Total Return index in all the last five years, with the highest total return CAGR of 75 per cent. The defence stock also emerged as the best all-round wealth creator in the study. MOFSL noted that that consistent wealth creation is a challenge, with only 13 out of 100 stocks outperforming in each of the last 5 years.
HAL was among seven (out of 10) consistent wealth creators that were trading at single-digit P/Es in March 2020, following the Covid lockdown. It had a return of equity (ROE) of 21 per cent then. This clearly suggests that sharp market corrections offer even healthy companies at attractive valuations, MOFSL said adding that buying into them leads to consistent wealth creation for a long period.
A couple of brokerages believes the stock has decent upside ahead. B&K Securities this week initiated coverage on Hindustan Aeronautics with a 'Buy' and a target price of Rs 5,610. India’s defence-aerospace landscape is at an inflection point. With squadron shortages intensifying, ageing platforms retiring faster than replacements, and a structural policy push towards indigenisation, Hindustan Aeronautics (HAL) sits at the centre of India’s most significant modernisation cycle in decades, B&K Securities said.
"As India’s only integrated manufacturer of airborne platforms backed by widespread manufacturing and R&D infrastructure, HAL’s strategic relevance is higher than ever. We ascribe 34x to our Dec-27E EPS, which yields a target price of Rs 5,610," it said.
Risks for the stock include execution slippages leading to delayed deliveries, growing presence of private sector and margin pressures.
Nirmal Bang said while Tejas deliveries have been delayed mainly due to GE engine delays, HAL may deliver 7 LCA Mk1A’s to the IAF in FY26. Despite this slowdown, it expects company’s performance will only be affected marginally as it will be offset by execution of orders such as AL-31FP and RD-33, along with deliveries of Su-30 MKIs to the IAF from FY27. Repair & overhauls are expected to retain their contribution of 65 per cent of the revenue in FY26, it said.
"The stock is trading at a 1-year forward P/E of 25.7 times, above its 5-year average of 18 times. We maintain our buy rating at a target price of Rs6,151, valuing the stock at 35 times Sep-27E EPS (+2 SD above the long-term average)," it said on December 4.
ICICI Secuirties in a note last month said while the company inaugurated third production line of LCA Mk1A and second line of HTT-40, non-availability of engines is plaguing execution. A ramp-up in execution could remain a key monitorable, it said while suggesting a target of Rs 5,725 on the stock. MOFSL itself has a target of Rs 5,800. Tejas aircraft deliveries and execution of manufacturing order book will be key drivers for the stock going forward, it said.
Hindustan Aeronautics Ltd (HAL) has emerged as the most consistent wealth creator in MOFSL's Wealth study 2025, beating the likes of Welspun Corp, Bharat Dynamics and Indian Bank, as the stock outperformed the Nifty Total Return index in all the last five years, with the highest total return CAGR of 75 per cent. The defence stock also emerged as the best all-round wealth creator in the study. MOFSL noted that that consistent wealth creation is a challenge, with only 13 out of 100 stocks outperforming in each of the last 5 years.
HAL was among seven (out of 10) consistent wealth creators that were trading at single-digit P/Es in March 2020, following the Covid lockdown. It had a return of equity (ROE) of 21 per cent then. This clearly suggests that sharp market corrections offer even healthy companies at attractive valuations, MOFSL said adding that buying into them leads to consistent wealth creation for a long period.
A couple of brokerages believes the stock has decent upside ahead. B&K Securities this week initiated coverage on Hindustan Aeronautics with a 'Buy' and a target price of Rs 5,610. India’s defence-aerospace landscape is at an inflection point. With squadron shortages intensifying, ageing platforms retiring faster than replacements, and a structural policy push towards indigenisation, Hindustan Aeronautics (HAL) sits at the centre of India’s most significant modernisation cycle in decades, B&K Securities said.
"As India’s only integrated manufacturer of airborne platforms backed by widespread manufacturing and R&D infrastructure, HAL’s strategic relevance is higher than ever. We ascribe 34x to our Dec-27E EPS, which yields a target price of Rs 5,610," it said.
Risks for the stock include execution slippages leading to delayed deliveries, growing presence of private sector and margin pressures.
Nirmal Bang said while Tejas deliveries have been delayed mainly due to GE engine delays, HAL may deliver 7 LCA Mk1A’s to the IAF in FY26. Despite this slowdown, it expects company’s performance will only be affected marginally as it will be offset by execution of orders such as AL-31FP and RD-33, along with deliveries of Su-30 MKIs to the IAF from FY27. Repair & overhauls are expected to retain their contribution of 65 per cent of the revenue in FY26, it said.
"The stock is trading at a 1-year forward P/E of 25.7 times, above its 5-year average of 18 times. We maintain our buy rating at a target price of Rs6,151, valuing the stock at 35 times Sep-27E EPS (+2 SD above the long-term average)," it said on December 4.
ICICI Secuirties in a note last month said while the company inaugurated third production line of LCA Mk1A and second line of HTT-40, non-availability of engines is plaguing execution. A ramp-up in execution could remain a key monitorable, it said while suggesting a target of Rs 5,725 on the stock. MOFSL itself has a target of Rs 5,800. Tejas aircraft deliveries and execution of manufacturing order book will be key drivers for the stock going forward, it said.