Hindustan Aeronautics shares hit new 52-week high; here's what pushing the stock higher

Shares of Hindustan Aeronautics Ltd (HAL) surged about 3 per cent during the trading session on Thursday as the company's contract value increased and CARE Rating reaffirmed its credit ratings. The company informed about the same through separate exchange filings on Wednesday.

In an exchange filing, the state-run defence major said that it has signed an amendment to the LCA (Light Combat Aircraft) IOC (Initial Operational Clearance) contract. The value of the contract has been revised from Rs 2,700.87 crore to Rs 5,077.95 crore, said the company.

CARE Ratings Ltd has reaffirmed the long term and short-term bank facilities (both fund based and non-fund based) to CARE AAA; stable and CARE A1 (Triple A with a stable outlook and A one plus), respectively, said the company in another exchange filing. The amount of their facilities is Rs 6,050 crore, it added.

Following the announcement, shares of Hindustan Aeronautics rose 2.89 per cent to hit its new 52-week high at Rs 3,322 on Thursday, commanding a total market capitalization of close to Rs 2.25 lakh crore. The scrip had settled at Rs 3,228.75 in the previous trading session on Wednesday.

"We revise to Accumulate from Buy, with a higher target price of Rs 2,975 from Rs 2,500 based on 28 times December 2025E P/E as we roll forward. Our revised target is driven by expectations from a new stream of the exports business, surge in inflows, stable margin, and sustained double-digit earnings growth," said Elara Capital.

Another domestic brokerage firm Prabhudas Lilladher downgraded the stock to 'hold' with a target price of Rs 2,787 after Q3 results but sees it as a strong long-term story "We believe HAL is a long-term play on the growing strength & modernization of India’s air defence," it said.

MoD recently signed contracts worth Rs 39,100 crore, of which HAL got a share of orders amounting to Rs 5,200 crore. These orders have been finalized following the approval of cabinet committee of security (CCS) earlier in Feb 2024.

The aero engines will be manufactured by HAL under transfer of technology (ToT) license from the Russian OEM. These aero engines are expected to sustain the operational capability of MiG29s. The programme will focus on indigenisation of several high value critical components, which would help increase the indigenous content of future repair and overhaul (ROH).


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