HAL shares up 15% in 2025, analysts see potential rally up to Rs 6,220. Here’s why

Shares of Hindustan Aeronautics Ltd (HAL) are on a tear, up nearly 15% so far in 2025, gaining momentum recently after the Ministry of Defence (MoD) signed a contract for 97 Light Combat Aircraft (LCA) Mk1A. Analysts now see the stock potentially rallying up to Rs 6,220, as investors bet on stronger revenue, higher indigenisation, and a boost to India’s domestic aerospace ecosystem from the company’s biggest defence order in years.

On Friday, HAL rose 1.3% to Rs 4,776 on the BSE, extending a two-day gain of 2.5%.

The MoD deal, valued at over Rs 62,370 crore (excluding taxes), includes 68 single-seat fighters and 29 twin-seaters. Deliveries are slated to begin in FY28 and will be completed over six years. The aircraft will feature more than 64% indigenous content, with 67 additional locally sourced components compared with HAL’s previous LCA Mk1A order from January 2021.


Advanced indigenous systems, including the UTTAM Active Electronically Scanned Array (AESA) Radar, Swayam Raksha Kavach electronic warfare suite, and control surface actuators, will be integrated.

A Ministry of Defence press release highlighted that the project is supported by nearly 105 Indian companies and is expected to generate approximately 11,750 direct and indirect jobs annually. "The LCA Mk1A is the most advanced variant of the indigenously designed and manufactured fighter aircraft and will serve as a potent platform to meet the operational requirements of the IAF," it added.

Brokerages see strong upside

Brokerages have maintained positive ratings on HAL, citing the order as a key milestone. Motilal Oswal retained its 'Buy' rating with a target price of Rs 5,800, noting that the contract and stabilisation of GE F404 engine deliveries "significantly de-risk HAL’s growth trajectory and reinforce its visibility as the cornerstone of India’s indigenous aerospace push."

Jefferies highlighted HAL as its top pick in the defence sector, pointing to India’s long-term capex roadmap and focus on indigenisation. The brokerage maintained its 'Buy' rating with a target of Rs 6,220.

Nomura also reiterated its 'Buy' rating with a target of Rs 6,100, saying, "With the receipt of this order, we estimate HAL’s order book to amount to Rs 2.45 trillion by the end of 2QFY26F… the commencement of the supply of engines by GE is a significant positive in our view, and we believe HAL’s delivery of LCA Mk1A aircraft should start getting streamlined going forward."

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Sector tailwinds and financial outlook

Analysts point to a supportive macro backdrop for Indian defence stocks. Jefferies noted that India’s Defence Secretary expects 17–18% annual defence capex growth over the next five years, with at least 75% earmarked for domestic procurement. Motilal Oswal projects a 24% CAGR in HAL’s revenue over FY25–28, with EBITDA margins forecast at 29.8%/28.6%/27.3% over FY26–FY28.

Key risks include slower-than-expected finalisation of large platform orders, potential delays in engine deliveries, delayed payments from the MoD, and increased private sector participation in defence projects.

HAL’s shares have risen 9.5% over the past year, reflecting investor confidence in the company’s robust order book and India’s push for indigenous defence manufacturing.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)