2 weeks ago
HAL shares rally 45% since April; analysts divided after Q1
Hindustan Aeronautics, often called HAL, is a big Indian company that builds fighter jets and helicopters for the military.
People who buy and sell shares have gotten very excited about HAL lately, and its stock price has gone up by 45 percent since April.
The company recently told everyone how much money it made in the April-to-June quarter, and it did better than many people expected.
Its profit grew by nearly 15 percent compared with the same time last year, and its sales grew by about 14 percent.
Even though the price of raw materials went up, HAL controlled its other costs well, so its profit margins improved.
HAL also has a huge book of orders from the government to build planes and helicopters in the coming years.
Because the stock has already climbed so much, financial experts do not all agree about whether to buy it.
Some say the price can still go higher, while others think it is already too expensive.
In the end, how the stock does will depend on whether HAL can build and deliver all the aircraft it has promised on time.
HAL shares have rallied 45% since April to around ₹4,945, approaching the record high of ₹5,675.
June-quarter consolidated profit rose 14.9% YoY to ₹1,589.68 crore, while revenue grew 14.4% to ₹5,515.17 crore.
EBITDA margin improved by 106 basis points to 27.9% despite a 24.5% rise in raw material costs.
Motilal Oswal and Anand Rathi retained 'Buy' ratings with ₹5,800 targets, while JM Financial ('Add', ₹4,770) and InCred ('Hold') were more cautious.
HAL closed FY26 with a ₹2.54 lakh crore order book and expects around ₹90,000 crore of fresh orders in FY27-28.
- Who
- Hindustan Aeronautics Limited (HAL), an Indian aerospace and defence company, and analysts at Motilal Oswal, Anand Rathi, JM Financial, and InCred Equities.
- What
- HAL reported better-than-expected June-quarter earnings while its shares rallied 45% since April, prompting mixed analyst views on whether the stock remains attractive.
- Where
- India, where HAL is based and its shares are traded.
- When
- The stock rally began in April; the company's June-quarter results were recently reported.
- Why
- Improved defence sector sentiment driven by expanding order books, strengthening defence spending, accelerating export momentum, and a better-than-expected Q1 performance.
Bullish analysts (Buy)
Cautious analysts (Add/Hold)
Valuation after the 45% rally
Bullish analysts (Buy)
Motilal Oswal and Anand Rathi rate HAL a 'Buy' with a ₹5,800 target, arguing the stock still has roughly 9.5% upside and earnings estimates remain unchanged.
Cautious analysts (Add/Hold)
JM Financial's 'Add' rating carries a ₹4,770 target below the current price (29x FY28E EPS), while InCred rates the stock 'Hold' at a 30x target multiple, citing a modest 6% EPS CAGR.
Growth drivers and delivery outlook
Bullish analysts (Buy)
With GE supply-chain issues easing, Tejas deliveries should ramp up from FY28, and other platforms (LCH Prachand, HTT-40, Su-30, engines) should support topline growth.
Cautious analysts (Add/Hold)
Much of the re-rating has already been captured ahead of deliveries, and HAL's ₹15,000-crore capex plan over the next 3-4 years could weigh on cash accruals and working capital.
Key facts
- Stock rally since April
- 45% to around ₹4,945
- Record high
- ₹5,675
- Q1 consolidated profit
- ₹1,589.68 crore (up 14.9% YoY)
- Q1 revenue
- ₹5,515.17 crore (up 14.4% YoY)
- EBITDA margin
- 27.9% (up 106 bps YoY)
- Order book at FY26 close
- ₹2.54 lakh crore
- Expected fresh orders (FY27-28E)
- Around ₹90,000 crore
- Brokerage target prices
- ₹5,800 (Motilal Oswal, Anand Rathi); ₹4,770 (JM Financial)
Quotes
Motilal Oswal
Brokerage research analyst
“The company’s results came in ahead of its estimates and therefore kept its earnings estimates unchanged.”
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