Shares of Hindustan Aeronautics Ltd (HAL) rose two percent on March 2 as the Indian government approved a large deal to procure aircrafts from the defence equipment manufacturer. At 9:23 am, shares of the company were trading 0.8 percent higher at Rs 2705.95 on the BSE.
The Union Cabinet approved the acquisition of 70 HTT-40 basic trainer aircraft from HAL for Rs 6,828.36 crore. The said aircraft will be supplied to Indian Air Force over a period of six years, the company said in an exchange filing.
HAL is focusing on the International Market, Civil Aviation, Civil Maintenance, Repair and Overhaul (MRO), Unmanned Aerial Vehicles (UAVs) and other diversified business opportunities through indigenous efforts and business collaborations in order to boost growth.
ICICI Securities said the defence company has a healthy order book position of Rs 84,000 crore which is 3.2 times Trailing Twelve Month revenues, led by large scale orders in manufacturing aircraft and helicopters.
Sharekhan by BNP Paribas said once the execution of large orders picks up pace, the company could post double-digit revenue growth from FY25 onwards.
“It is bullish on HAL’s growth trajectory as it is one of the key beneficiaries of structural reforms in the defence sector. Another thing Sharekhan likes is that the company is debt-free and has strong cash and equivalents and healthy return ratios. The stock is currently trading at around 15 times its September FY2024 EPS, which is lower than its listed peers in the defence pack”, the brokerage firm said.
HAL, the largest defence PSU in India, is engaged in design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.