HAL shares: Hindustan Aeronautics in focus as Defence Ministry looks to procure 156 light combat helicopters 

Shares of Hindustan Aeronautics Ltd (HAL) are in focus on Tuesday after the PSU defence company said the Request for Proposal (RFP) has been issued by the Ministry of Defence for procurement of 156 Light Combat Helicopter. This included 90 units for Indian Army and 66 units for IAF. 

In a filing to stock exchanges, HAL said: "We would like to inform that, Request for Proposal (RFP) has been issued by the Ministry of Defence for procurement of 156 Light Combat Helicopter (90 nos. for IA and 66 nos. for IAF)," it said.

HAL shares are up 84 per cent in 2024 so far and 167 per cent in the past one year.  

Chola Securities recently included HAL among its investment ideas for the forthcoming Budget, saying the stock is a pure play on defence and Make in India.

Our of the total allocations of Rs 47,65,768 crore (approx. $574 billion) in the interim Budget 2024-2025, Rs 6,21,541 crore ($74.8 billion) has been earmarked to the Ministry of Defence (MoD). Representing an increase of 4.7 per cent over the previous allocations.

HAL, Chola Securities said, is sitting on strong order book of around Rs 94,000 crore, up 15 per cent YoY, and that its pipeline is strong. "Ministry of Defence has set a target of achieving a turnover of Rs 1.75 lakh crore in aerospace and defence manufacturing by 2025, which includes exports of Rs 35,000 crore.

Chola Securities said HAL has established strategic alliances with General Electric (USA), Safran Helicopter Engines (France) and Airbus.

"It’s a net debt free, having cash per share of about Rs 395. Shareholders enjoy dividend yield of 0.59 per cent. Strong financials ROE of 29 per cent, margins 32 per cent based of FY’24," it said. 

Chola Securities noted that HAL's profit has compounded at a annual growth rate of 27 per cent over last five years.