Could HAL Shares Continue to Rally After Cabinet Clears Rs 62,000 Crore Tejas Fighter Jet Deal?
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Synopsis
HAL shares surged after the Cabinet approved a massive fighter jet deal. This strategic move marks a significant leap for India's indigenous defense capabilities amid rising market anticipation. Investors are keenly observing this development as HAL aims to enhance its growth trajectory.
Key Takeaways
- HAL shares surged after government approval of a major fighter jet deal.
- The deal is valued at Rs 62,000 crore for 97 LCA Mk1A jets.
- HAL's Tejas program aims to replace older MiG-21 aircraft.
- Despite a decline in net profit, operational revenue showed strong growth.
- UBS maintains a 'neutral' rating on HAL shares.
Mumbai, Aug 20 (NationPress) The shares of Hindustan Aeronautics Ltd (HAL), a prominent player in the public sector defense industry, experienced a notable rise of 1.82 percent to reach Rs 4,533 during early trading on Wednesday following anticipation of securing a significant order from the government.
After the market opened, the shares jumped by 3.5 percent to Rs 4,605, although this surge prompted a slight sell-off.
The Cabinet Committee on Security has sanctioned the procurement of 97 Light Combat Aircraft (LCA) Mark1A fighter jets for an estimated Rs 62,000 crore.
HAL is advancing its indigenous Tejas program, aimed at replacing the aging MiG-21 fleet in India. The LCA Mk1A represents an enhanced iteration of the Tejas, tailored for superior combat performance, and this new defense contract marks the second significant order for the aircraft, following HAL's success in February 2021.
Over the past five days, HAL's shares have increased by 26.60 points, or 0.59 percent, and have risen by 8.72 percent year-to-date.
In July, the shares experienced a substantial uptick after the Defence Acquisition Council (DAC) approved 10 major procurement agreements valued at Rs 1.05 lakh crore, all categorized under Buy (Indian–IDDM). This includes surface-to-air missiles, an Integrated Common Inventory Management System for the Tri-Services, an Electronic Warfare System, and armored recovery vehicles, all of which received Acceptance of Necessity (AoN) approvals.
Global brokerage firm UBS has maintained a 'neutral' stance on the stock, setting a target price of Rs 4,900.
Despite a 3.7 percent decline in net profit year-on-year to Rs 1,383.8 crore, HAL's operational revenue increased by 10.8 percent to Rs 4,819 crore in Q1 FY 26. EBITDA surged nearly 30 percent to Rs 1,284 crore, with margins improving to 26.7 percent from 22.8 percent a year earlier, defying earlier expectations of a downturn.
Point of View
I believe that HAL's recent developments indicate a robust trajectory for India's defense sector. The approval of such a significant order showcases the government's commitment to indigenous manufacturing and strengthens national security. This partnership is pivotal for HAL's growth and for India's self-reliance in defense production.
NationPress
30/08/2025
