HAL shares crash 6% post Q2 show, brokerages see up 33% rise with Tejas delivery in focus

HAL shares target price: Brokerage firms continued to remain positive on Hindustan Aeronautics (HAL) shares and see up to 33 per cent upside in the state-run defence major, even as it reported a muted set of performance for the September 2025 quarter. The stock extended its fall on Thursday.

HAL reported a consolidated net profit of Rs 1,669.07 crore for the July-September 2025 period, rising 10.5 per cent on a year-on-year (YoY) basis, while revenue from operations increased nearly 11 per cent YoY to Rs 6,628.61 crore for the quarter. However, ebitda dropped 5 per cent YoY to Rs 1,558 crore, while margin contracted 387 basis points to 23.5 per cent for the period.

Shares of Hindustan Aeronautics tumbled more than 2.23 per cent to Rs 4,641 on Thursday, commanding a total market capitalization over 3.10 lakh crore. The stock has tumbled nearly 5.8 per cent in the last two sessions from Rs 4,910 since announcement of results.

"We expect some of the provisions made this quarter to be reversed in the upcoming quarters. Under the base case scenario, HAL should be able to deliver seven LCAs in the current fiscal year, barring any supply-side constraints from domestic vendors," said Nirmal Bang Institutional Equities. "We believe it will continue to deliver AL31-FP engines for the existing Su-30 MKI fleet with fewer hiccups."

Revenue, Ebitda, and PAT are projected to clock a CAGR of 16 per cent, 15 per cent and 19 per cent, respectively, over FY25-FY27E, outpacing the management guidance. The stock is trading at a 1-year forward P/E of 26.7 times, above its 5-year average of 18 per cent, it said. "We maintain our 'buy' rating at a target price of Rs 6,151, valuing the stock at 35 times September 2027E EPS."

Choice Broking believes that HAL delivered a reasonably strong operational performance in Q2FY26, even though profitability witnessed some contraction. The shortfall in Ebitda margin was primarily driven by higher provisioning expenses this quarter. It remains confident that HAL is well-positioned for a stronger second half in FY26.

Operationally, HNAL’s momentum continues to strengthen – production lines across Bengaluru and the newly-commissioned Nashik facility are being ramped up. A robust order backlog of over 7.1 times of FY25 revenue provides a multi-year revenue runway. The key execution constraint – GE F404 engine supply – appears to be easing, supported by resumed deliveries, Choice said.

"We believe this development is helping to pare down a major execution overhang and significantly de-risks HNAL’s FY27–FY28E revenue trajectory. Tejas Mk1A delivery schedule remains a key investor monitorable in the next few quarters. We maintain our 'buy' rating on the stock with a target price of Rs 5,570," it added.

HAL's Q2FY26 revenue and PAT came in line with estimates. Lower-than-expected margins were offset by higher other income. During the quarter, the company received a follow-on order of 97 Tejas Mk1A worth Rs 62,400 crore and signed a contract with GE for engine supplies for this project, said Motilal Oswal Financial Services (MOFSL).

"We await the deliveries of Tejas Mk1A fighter jets as the test flight was already conducted in October 2025. HAL has a strong order book, which provides good visibility on future execution. We broadly maintain our estimates and target price of Rs 5,800, it added with a 'buy' rating. "Tejas aircraft deliveries and execution of manufacturing order book will be key drivers for HAL."