400% return in 5 years! Prabhudas Lilladher initiates coverage on this multibagger stock with 'Buy' rating

Shares of leading defence and aerospace company Hindustan Aeronautics Limited (HAL) have zoomed around 400 per cent in the last 5 years. The multibagger stock is in focus after the stock split as the face value and paid-up value of the equity shares of the company has been changed from Rs 10 each to Rs 5 each.

Prabhudas Lilladher has initiated its coverage on Hindustan Aeronautics (HAL) with a ‘Buy' rating at a target price of Rs 2,266, suggesting an upside potential of over 17 per cent from Friday's closing price of Rs 1932.

"HAL is a play on the growing strength & modernization of India’s air defence given its position as the primary supplier of India’s military aircraft, long-term sustainable demand opportunity, owing to the government’s push on procurement of indigenous defence aircraft, leap in HAL’s technological capabilities due to the development of more advanced platforms (Tejas, AMCA, etc.), the robust order book of Rs 818 billion with a further 5-year pipeline of Rs 2 trillion, and improvement in profitability through scale and operating leverage," it said.

It noted that there is a substantial need for the Ministry of Defence to sanction a slate of aircraft acquisitions over the next 10-15 years. "Given its monopoly-like position in India’s defence aerospace sector, coupled with the government’s aggressive stance on procuring indigenously designed & developed defence aircraft, HAL is in a sweet spot to significantly benefit from this long-term demand opportunity," it said.

Prabhudas Lilladher further added that HAL continues to engage with prospective customers and advance negotiations. The company's expanding global footprint underscores its transition from being solely an Indian-licensed manufacturer to emerging as a leading defence aircraft manufacturer on the global stage.

About Hindustan Aeronautics Limited

Hindustan Aeronautics (HAL) was formed in 1964 following the merger between Hindustan Aircrafts and Aeronautics India. It is India’s largest DPSU and the sole indigenous producer of India’s fighter aircraft.

HAL caters to India’s defence aerospace requirements through the design, development, manufacture, repair & overhaul (RoH), upgrade and servicing of aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. The company mainly supplies its products and services to the Indian Armed Forces, with exports and civil businesses contributing a minute share to the business.

Hindustan Aeronautics Limited: Q1 Performance

The state-run aerospace reported a consolidated net profit of Rs 814 crore in the first quarter of FY24, which is 31 per cent higher than Rs 620 crore earned in the same quarter last year. However, the net profit dropped 71 per cent in Q1 FY24 from Rs 2,831 crore in the March quarter of FY23.

Revenue from operations jumped 8 per cent to Rs 3,915.35 crore for the June quarter from Rs 3,622 crore in Q1 FY23.

 

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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