Defence stock HAL climbs 5%, hits record high today. Here's why

Shares of Hindustan Aeronautics Ltd (HAL) climbed 5 per cent in Friday's trade to hit a fresh record high after the Defence Acquisition Council (DAC) approved capital acquisition proposals worth Rs 2.23 lakh crore to enhance the operational capabilities of the armed forces.

This included nod for procurement of light combat helicopters & light combat aircraft Mk 1A (Tejas) from HAL. The AONs have also been accorded for upgradation of Su-30 MKI aircraft indigenously from HAL.

Following the development, the defence stock rose 4.85 per cent to hit a high of Rs 2,498 on BSE.

"We wish to inform that, as per Press Information Bureau, Defence Acquisition Council (DAC) accorded Acceptance of Necessity (AON) for procurement of Light Combat Helicopter (LCH) for Indian Air Force & Indian Army and Light Combat Aircraft (LCA) Mk 1A for Indian Air Force from HAL under Buy (lndian-IDDM) category. The AONs have also been accorded for upgradation of Su-30 MKI Aircraft indigenously from HAL," the defence company said.

While  procurement of the equipment would provide strength to the IAF, acquisition from domestic defence industries is seen taking the indigenous capability to a new height. It would also reduce dependability on foreign Original Equipment Manufacturers (OEMs) substantially.

"We believe, with increasing indigenization and favourable government policies, defence sector will continue to flourish. We maintain our overweight stance. Our preferred stock in the sector are HAL, BEL, and Data Patterns," InCred Equities said in a note on Thursday.

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