HAL share price: 43% upside! Tejas Mk1A delivery, ‘even one aircraft’, key re-rating trigger, says Jefferies

Jefferies on Wednesday retained its 'Buy' rating on Hindustan Aeronautics Ltd (HAL) with a target of Rs 6,800, implying 43 per cent potential upside for the defence stock. Jefferies noted that HAL has completed the delivery of the Tejas Mk1 trainer aircraft contract on September 18 and its CMD Ravi Kota, as per media reports, was confident of delivering the Tejas Mk1A aircraft this year.

Key rerating trigger
Jefferies said Kota has been closely associated with India’s Light Combat Aircraft (LCA) program historically, noting that Tejas Mk1A is 43 per cent of HAL’s order book and a key re-rating trigger for the stock.

The foreign brokerage said Kota has reportedly been known as “LCA man” in defence circles and was elevated to CMD of HAL in May 2026 after serving as Director of Operations. He has worked at HAL for 30 years and previously served as Executive Director & General Manager of the LCA Tejas Division.

"He is credited with HAL concluding the Rs 1.1 lakh crore Tejas Mk1A orders for 180 aircraft from the Indian Air Force. He has also been involved with expanding HAL’s Tejas Mk1A production capacity at Nashik, increasing the aircraft’s indigenous content, and developing private-sector suppliers for major fuselage assemblies," Jefferies said.

HAL trades at 13% discount to BEL  

Jefferies said its Rs 6,800 target values HAL at 35 times estimated September 2028 earnings per share, which is 33 per cent below its peak multiple and a 13 per cent discount to Jefferies target multiple for Bharat Electronics Ltd (BEL)

The foreign brokerage noted that 90-95 per cent of radar and missile integration/certification has completed for Tejas Mk1A. In his media interviews, the CMD mentioned  that testing is on to ensure requirements are in place for Tejas Mk1A deliveries to begin.

Even one aircraft matters

"24 airframes are ready, where a GE engine has been put in and aircraft has been tested. Hence, there is confidence on delivering 10 aircraft this year, which compares favorably to our assumption of 5 aircraft. HAL’s stock has de-rated given delays on Tejas Mk1A since 2024 and raised investor concerns on the company’s execution ability. We believe that Indian Air Force accepting delivery of even one aircraft will give confidence on the company’s abilities and be a key upside driver," Jefferies said.

Jefferies said HAL's Rs 2.55 lakh crore order book is 7.7 times FY26 revenues. Its Rs 1.8 lakh crore pipeline provides visibility for FY27E-30E and beyond.