Hindustan Aeronautics (HAL), Bharat Defence (BDL), Astra Microwave Products, among other defence stocks rallied on Monday, despite a muted trend in the broader Indian stock market.
Astra Microwave Products, Cochin Shipyard, Data Patterns (India), and DCX Systems were among the top gainers in the Nifty India Defence index, rising 2–4% each. The index itself advanced nearly 1% in early trade.
Hindustan Aeronautics, Paras Defence and Space Technologies, Mishra Dhatu Nigam, Bharat Dynamics (BDL), and Bharat Electronics also traded higher.
The uptrend in defence counters came amid reports that the Ministry of Defence has received and begun discussions on a proposal from the Indian Air Force to acquire 114 ‘Made in India’ Rafale fighter jets. The deal, to be executed by French aerospace major Dassault Aviation in collaboration with Indian firms, is estimated to be worth over ₹2 lakh crore.
The proposal, which envisages more than 60% indigenous content, is likely to be taken up for consideration by the Defence Procurement Board, chaired by the Defence Secretary, in the coming weeks, according to ANI.
Meanwhile, India has already ordered 180 LCA Mark1A jets and also has plans to induct the indigenous fifth-generation fighter in large numbers beyond 2035.
HAL shares in focus
Hindustan Aeronautics Ltd shares were in the spotlight after reports indicated the company has received delivery of the GE 404 engine, with the fourth engine expected by September-end. The defence PSU is also slated to supply the first two Tejas MK1A aircraft by October, marking the commencement of revenue recognition from its sizeable order backlog of 83 Tejas MK1A jets.
Consistent monthly deliveries of two engines from GE could pave the way for the finalization of an additional order for 97 Tejas MK1A aircraft, taking the total order backlog to 180. This would significantly enhance HAL’s revenue visibility and strengthen its already robust order book of ₹2.5 lakh crore.
Antique Stock Broking retains its positive stance on Hindustan Aeronautics given the multi-year double-digit earnings growth potential and robust return ratio profile of +20%. It believes that HAL share price is attractively valued and thus retains a ‘Buy’ rating on the stock with a target of ₹6,360, valuing the company at a PE of 40x 1HFY28E earnings.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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