Buy Hindustan Aeronautics, target price Rs 5,000: ICICI Securities

ICICI Securities has a buy call on Hindustan Aeronautics with a target price of Rs 5,000. The current market price of HAL is Rs 4212.75 . Hindustan Aeronautics, incorporated in 1963, is a Large Cap company with a market cap of Rs 283186.09 crore, operating in the Defence sector.

Hindustan Aeronautics' key products/revenue segments include Sale of services, Spares And Others, Engineering Goods, Other Operating Revenue, Development Projects, Miscellaneous for the year ending 31-Mar-2024.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 7588.71 crore, up 16.41% from last quarter Total Income of Rs 6518.70 crore and up 16.37% from last year same quarter Total Income of Rs 6521.26 crore. The company has reported net profit after tax of Rs 1434.36 crore in the latest quarter.

The company?s top management includes Mr.C B Ananthakrishnan, Mr.E P Jayadeva, Mr.Atasi Baran Pradhan, Dr.Divya Gupta, Mr.Deepak Abasaheb Shinde, Dr.D K Sunil, Mr.T Natarajan, Mr.M Z Siddique. Company has Maharaj N R Suresh & Co. as its auditors. As on 31-12-2024, the company has a total of 67 Crore shares outstanding.

Investment Rationale
ICICI Securities recently upgraded the stock to BUY from Add, as engine delivery (GE F404) for Tejas Mk-1a commissions. This comes as major relief lingering around HAL?s execution concerns for Tejas fighter aircraft. This apart, recently CCS has given approval for 156nos. of LCH Prachand worth Rs 627 billion, to be executed over the next 8 years. The current orderbook of Rs 1,840 billion (~6x ttm) provides sufficient revenue visibility in the near term. Going forward, the orderbook pipeline remains strong with OI expectation of >Rs 1,400 billion (including RoH orders) for FY26E. Besides, the progress on development of Tejas Mk-II and AMCA is ongoing. The brokerage also believes the execution of Tejas Mk-1A would be beneficial for other companies involved in the supply chain such as BEL, Astra Microwave and Dynamatic Technologies. They maintain a BUY with DCF-based unchanged target price of Rs 5,000.

Promoter/FII Holdings
Promoters held 71.64 per cent stake in the company as of 31-Dec-2024, while FIIs owned 12.26 per cent, DIIs 8.09 per cent.