Will HAL Shares Continue to Rally After Tejas Fighter Jet Deal Approval?
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Synopsis
Hindustan Aeronautics Ltd (HAL) shares surged after the government approved a major contract for Tejas fighter jets. With a recent rise in stock value and promising financial performance, HAL's future looks bright. This article delves into the implications of the deal and what it means for investors and the defense sector.
Key Takeaways
- HAL's shares rose 1.82% following defense deal news.
- Cabinet approved purchase of 97 Tejas fighter jets.
- Stock shows strong year-to-date performance.
- HAL's revenue increased despite slight profit decline.
- UBS maintains neutral rating with target price of Rs 4,900.
Mumbai, Aug 20 (NationPress) Shares of Hindustan Aeronautics Ltd (HAL), a prominent public sector defense firm, experienced a rise of 1.82 percent, reaching Rs 4,533 in early trading on Wednesday, following news that the company is on the verge of receiving one of its largest contracts from the government.
After the market commenced, the stock price jumped by 3.5 percent to Rs 4,605, although this uptrend prompted a slight sell-off.
The Cabinet Committee on Security has given the green light for the procurement of 97 Light Combat Aircraft (LCA) Mark1A fighter jets, valued at around Rs 62,000 crore.
HAL is advancing its indigenous Tejas program aimed at replacing India's aging MiG-21 fleet. The LCA Mk1A represents an enhanced version of the Tejas, engineered for superior combat effectiveness, and this latest defense contract is the second major order for the aircraft since HAL's earlier contract win in February 2021.
In the past five days, shares of Hindustan Aeronautics Ltd have increased by 26.60 points or 0.59 percent, and they have risen 8.72 percent year-to-date.
In July, the stock experienced a significant surge following approval from the Defence Acquisition Council (DAC) for ten major procurement initiatives worth Rs 1.05 lakh crore, all classified under the Buy (Indian–IDDM) category. Among the approved items are surface-to-air missiles, an Integrated Common Inventory Management System for the Tri-Services, an Electronic Warfare System, and armored recovery vehicles.
Global brokerage UBS has maintained a 'neutral' outlook on the stock, setting a target price of Rs 4,900.
Despite a 3.7 percent year-on-year decline in net profit to Rs 1,383.8 crore, HAL's operational revenue saw an increase of 10.8 percent to Rs 4,819 crore in Q1 FY 26. Furthermore, EBITDA surged nearly 30 percent to Rs 1,284 crore, with profit margins climbing to 26.7 percent from 22.8 percent a year prior, contrary to expectations of a downturn.
Point of View
The approval of the Tejas fighter jet deal marks a significant milestone for HAL and India's self-reliance in defense manufacturing. This move not only strengthens our military capabilities but also boosts investor confidence in domestic defense companies, aligning with the government's vision of Atmanirbhar Bharat.
NationPress
30/08/2025
Frequently Asked Questions
What is the significance of the Tejas fighter jet deal?
The Tejas fighter jet deal is crucial as it represents a major step towards enhancing India's defense capabilities and reducing dependency on foreign aircraft.
How has HAL's stock performed recently?
HAL's stock has seen a considerable increase, gaining over 8% year-to-date, reflecting positive investor sentiment following new government contracts.
What are the financial implications for HAL from this deal?
Despite a slight dip in net profit, HAL's revenue from operations has increased, indicating strong demand and positive growth prospects for the company.
