HAL share price to remain in focus on Tuesday after company signs 2 contracts with Ministry of Defence; Should you buy? | Stock Market News

Hindustan Aeronautics Limited (HAL) share price will remain in focus on Tuesday session after the company announced on March 28 that it has signed two contracts with Ministry of Defence.

HAL stock gained nearly a per cent on Friday to close at ₹4,179.90 on National Stock Exchange (NSE). The multibagger stock has given significant rewards by surging as much as 1,491.86 per cent in past five years.

The stock was the top performer on the Nifty PSE index in March, surging by 35 per cent. This marks its highest monthly return in the past five years.

HAL – MoD contract details

On Friday, the government signed two contracts worth ₹62,700 crore with Hindustan Aeronautics Limited (HAL) for the procurement of 156 Light Combat Helicopters (LCH) – Prachand. As per the Ministry of Defence, the first contract includes the supply of 66 LCHs to the Indian Air Force (IAF), while the second covers 90 LCHs for the Indian Army.

The delivery of these helicopters will begin in the third year and continue over the following five years. The LCH is India’s first indigenously designed and developed combat helicopter, capable of operating at altitudes exceeding 5,000 meters.

This helicopter incorporates a significant number of components that are designed and manufactured in India, with plans to achieve over 65% indigenous content during the procurement process.

The project will involve more than 250 domestic companies, primarily MSMEs, and is expected to create over 8,500 direct and indirect jobs. Additionally, the ministry has signed a contract with Metrea Management for the wet leasing of a Flight Refueling Aircraft (FRA) to facilitate air-to-air refueling training for Indian Air Force (IAF) and Indian Navy pilots.

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Metrea will supply the KC-135 FRA within six months, marking the first-ever wet leasing of such an aircraft by the IAF. With the signing of these three contracts, the Ministry of Defence has finalized a total of 193 contracts in 2024-25, surpassing ₹2,09,050 crore in total value—the highest ever recorded and nearly double the previous peak. Of these, 177 contracts (92%) have been awarded to the domestic industry, amounting to ₹1,68,922 crore (81% of the total contract value).

On Wednesday, the company announced that GE Aerospace has delivered the first of 99 GE-404 engines for the LCA Mark 1A, following a two-year delay, with the first aircraft potentially rolling out by April.

Should you buy or sell?

Brokerage firm Axis Securities has upgraded the HAL stock from ‘add’ to ‘buy’ and recommend it as its top pick among DPSUs.

“HAL for the light combat aircraft Tejas Mk 1A (Delivering for India Today and Into the Future | GE Aerospace News). In our view, this development allays concerns on the execution front. We expect revenue growth of 25–28% through to FY27E, based on the order book (OB) estimated at more than INR 1.3trn. Besides, there are further orders of 97 (nos.) Tejas Mk 1A and 156 (nos.) LCH Prachand in the pipeline. As a result of reduced execution concerns and lower risk on our earnings estimates, we roll back our WACC to 11% (earlier 12%), resulting in a revised TP of INR 5,000 (earlier INR 4,065). We upgrade HAL to BUY (from Add) and recommend it as our top pick among DPSUs,” the brokerage firm said in a note.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.