Hindustan Aeronautics was in trouble after the Indian Air Force’s (IAF) chief called out HAl for delay in deliveries of orders. To that, HAL in its response said, GE Aerospace didn’t supply engines for the light combat aircraft Tejas.
ICICI Securities on HAL: Upgrades to Buy from Hold
However, two days back GE Aerospace delivered the first of 99 F404-IN20 engines to HAL for the light combat aircraft Tejas Mk 1A, which will help ramp up execution. Following this, ICICI Securities in a research note upgraded the rating to ‘Buy’ from ‘Hold’ on the stock. Plus, it raised the target price by 23% to Rs 5,000 from Rs 4,065. “We see this is a vital development that allays execution risk concerns” said ICICI Securities in a research note.
ICICI Securities on HAL: New orders to leg up order book
The recent order of 97 Tejas Mk 1A and 156 LCH Prachand will leg up the company’s order book. “We expect revenue growth of 25–28% through FY27, based on the order book estimated at more than Rs 1.3 lakh crore,” said ICICI Securities. This may result in earnings per share growth at a compounded annual rate of 39% by FY27 from FY25.
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While the company can manufacture 24 Tejas Mk 1A, the brokerage house estimates only a gradual ramp-up from 10 in FY26 to 24 by FY30.
Besides, HAL aims to complete the assembly of the first Tejas Mk-II aircraft by October 2025 and achieve its maiden flight by the end of March 2026 (HAL Nears Completion of First Tejas MkII Aircraft as Assembly Progresses Swiftly – Indian Defence Research Wing).
IAF was not confident on HAL
Coming back to trouble, during Aero India 2025, IAF Chief Air Chief Marshal A P Singh criticized the company for the delays in the delivery of the Light Combat Aircraft (LCA)-Mk1A. “You have to alleviate (our) worries and make us more confident. At the moment, I am just not confident of HAL, which is a very wrong thing to happen,” Singh said.
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The share price of HAL has risen 3.77% in the past five trading sessions.
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