From ₹2,242 to ₹4,108: HAL share doubles in a year on back to back order wins

Shares of government-owned Hindustan Aeronautics Ltd (HAL) rallied over 4% in intraday trade on Monday as sentiment was boosted after the defence ministry cleared nine procurement proposals of around ₹45,000 crore, including ones to acquire 12 Sukhoi Su-30 MKI fighter jets. The 12 Sukhoi fighter jets worth around ₹1,200 crore will be manufactured at HAL’s Nashik factory.

Reacting to the news, HAL shares gained as much as 4% to hit an intraday high of ₹4,108, while the market capitalisation rose to ₹1.33 lakh crore. Early today, the defence heavyweight opened higher at ₹4,100 against the previous closing price of ₹3,947.40 on the BSE.

The share price of HAL has nearly doubled in the last one year after it hit a 52-week low of ₹2,242 on September 28, 2022, driven by back to back order wins. HAL shares touched a 52-week high of ₹4,180 on September 11, 2023.

The PSU stock has risen 57% in the calendar year 2023, while it surged 51% in six months. The counter added 5% in a month, while it shed 1.5% in a week as investors booked profit at higher levels.

ICICI Securities in a latest report says HAL will benefit from the defence ministry’s procurement proposals. The domestic brokerage has maintained ‘ADD’ rating on HAL shares with a target price of ₹4,350 per share.

“We believe proposals such as Dhruvastra are likely to be fast tracked through emergency procurement, resulting in orders towards the end of the year. We see HAL to be the major beneficiary from the Acceptance of Necessity (AoN) for 12 nos. Sukhoi-MKI aircraft and avionic upgradation of Dornier aircraft,” it says in a report.

“The AoN for 12nos. Su-30MKI implies the first major manufacturing order for FY24,” it adds.

HAL shares also remained in focus ahead of its record date for the sub-division of equity shares. The defence company has fixed September 29, 2023, as the record date to determine the eligibility of shareholders for the proposed split of shares. The shareholders of the company, in its recently concluded AGM, approved a stock split of existing 1 equity share of the face value of ₹10 each fully paid up into 2 equity shares of ₹5 each fully paid up.

For Q1FY24, HAL reported a consolidated net profit of ₹814 crore, up 31% from ₹620 crore in the same quarter last year. However, the net profit dropped 71% from ₹2,831 crore in the March quarter of FY23. Revenue from operations rose 8% to ₹3,915.35 crore as against ₹3,622 crore in Q1 FY23. The EBITDA (earnings before interest, tax, depreciation and amortisation) stood at ₹880 crore in Q1FY24, up 6% as compared with ₹830 crore in the year-ago period. The company also declared a final dividend of ₹15 for the FY23.

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