HAL shares range-bound despite better-than-expected Q2 results. What Goldman Sachs, Nuvama and other brokerages expect

Shares of Hindustan Aeronautics (HAL) traded with minor gains and losses on Friday, after dropping over 2% in the previous session even after the defence major’s Q2 results beat estimates. Brokerages, however, remain mixed on their views for the stock, with some being bullish while others advise caution.

HAL shares traded at around Rs 4,848 apiece on NSE on Friday morning. Yesterday, the company reported a 16% year-on-year (YoY) increase in consolidated profit after tax (PAT) to Rs 1,935.64 crore for the second quarter of FY27, compared with Rs 1,669.05 crore in the corresponding quarter of the previous financial year.

The defence major’s revenue from operations rose nearly 15% YoY to Rs 7,613.25 crore in Q2 FY27, against Rs 6,628.61 crore reported in the year-ago period. Expenses meanwhile increased around 16% YoY to Rs 6,132 crore during the quarter under review.


Also read | Hindustan Aeronautics Q2 Results: Profit rises 16% YoY to Rs 1,936 crore; revenue grows 15%

Nuvama on HAL share price

Nuvama noted that HAL posted a weak performance in Q2 with profit up a mere 10% YoY even as execution rose a healthy 15% YoY. This was led by EBITDA missing Street’s estimate by 10% while margins contracted. Despite a Rs 2.5 trillion backlog, near-term growth hinges on

execution ramp-up across platforms, the brokerage said.

It retained its ‘Hold’ rating on the shares of HAL, stating that its near-term upside is dependent on LCA Tejas deliveries. A rising product or platform mix is likely to be margin dilutive capping FY26-29 EPS CAGR to 12% despite a 20% revenue CAGR, the brokerage added.

Nuvama maintained its ‘Hold’ rating on the shares of HAL but increased its target price to Rs 5,250 apiece from Rs 5,040 apiece, with the latest target price implying over 8% upside potential from the stock’s previous closing price.

Goldman Sachs on HAL share price

Goldman Sachs reiterated its 'Buy' call on the shares of HAL, with a target price of Rs 5,870 apiece, implying 21% upside potential. The international brokerage noted that the company's Q2 EBITDA missed estimates while revenue and EPS were in line with expectations, ET Now reported.

It added smoother F-404 engine supply from GE Aerospace is a key catalyst, while dispatch of seven F-404 engines removes a major uncertainty. Additionally, Tejas Mk-1A and higher helicopter deliveries are also seen as growth drivers, according to the report.

Citi on HAL share price

Citi maintained its 'Buy' rating on the shares of HAL with a target price of Rs 6,175 apiece, implying 27% upside potential. The international brokerage noted that the company's Q2 revenue was in line with its estimate, although EBITDA missed its expectation on weaker gross margin, ET Now reported.

The company's engines, helicopters, and repair work offset the delayed Mk1A ramp, Citi said, adding that HAL's inventory rose 39% YoY, signalling rising execution preparedness, according to the report.

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Equirus on HAL share price

Equirus Securities pointed out that the first half of any financial year is seasonally weak for HAL and traditionally accounts for nearly 33-35% of annual sales. The company’s 15% sales growth to Rs 7,610 crore in Q2 was 5% higher than the brokerage’s estimates and 2% ahead of consensus expectations.

The defence major’s 12% EBITDA growth to Rs 1,740 crore was 12% ahead of Equirus’ estimate but 9% below consensus expectation. The brokerage has a ‘Long’ rating on the shares of the company with a target price of Rs 5,330 apiece, implying more than 10% upside potential from the stock’s previous closing price.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.