Shares of Hindustan Aeronautics (HAL) surged during the trading session on Thursday after the state-run defence player reported its quarterly earnings on Wednesday. Following the quarterly earnings, brokerage firms are mostly positive on the stock, citing strong upside potential.
Hindustan Aeronautics reported a 14 per cent year-on-year (YoY) rise in its net profit to Rs 1,439.83 crore in the December 2024 quarter. The state-run aerospace and defence player clocked a revenue from operations at Rs 6,957 crore in the quarter, up 15 per cent YoY.
HAL's Ebitda for the third quarter of the current fiscal year increased 17 per cent YoY to Rs 1,683 crore, while operating margins stood at 24.2 per cent. Along with this, the company board of HAL has declared the first interim dividend of Rs 25 per share and fixed February 18 as the record date. The dividend will be paid to eligible shareholders on March 14.
Shares of Hindustan Aeronautics rose 3.75 per cent to Rs 3,730.90 on Thursday, commanding a total market capitalization close to Rs 2.5 lakh crore. The scrip had settled at Rs 3,596.15 on Wednesday. The stock has dropped nearly 35 per cent from its 52-week high at Rs 5,675 hit in July 2024.
HAL received Rs 58.9 crore as compensation for acquiring company-owned land measuring 315 square meters by Bangalore Metro Rail Corporation for the Metro Rail Project During the nine months ending December 31, 2024. The financial results indicate this as an extraordinary item, said Nirmal Bang Institutional Equities.
HAL reported a revenue growth on the account of higher execution. EBITDA increased due to better product mix and a slight decline in employee costs, Nirmal Bang said. "We maintain a 'buy' rating with a target price of Rs 4,655, valuing the stock at 24 times March 2027E EPS, supported by a robust order book," it added.
Choice Broking project's revenue, Ebitda, and PAT of HAL to grow at a CAGR of 13 per cent, 12 per cent, and 11.3 per cent, respectively, over FY24-27E. "As a result, we have revised our earnings estimates for FY26E and FY27E, lowering EPS projections by 2.8 per cent and 2.2 per cent, respectively due to delays in the F404-IN20 standard engine," it said.
Based on these adjustments, Choice Broking has maintained its 'buy' recommendation and revised target price to Rs 5,000, implying a valuation of 32times FY27E EPS. "We will closely monitor execution progress, and any improvement in the GE F404-IN20 variant engine delivery timeline could lead to a reassessment of our target price and valuation multiples," it said.
Overseas brokerage firm Morgan Stanley has maintained an 'overweight' rating on HAL citing healthy revenue and order inflows in Q3FY25. 9MFY25 order inflows were healthy, driven by orders of Sukhoi engines and aircrafts. It is expecting an order of Rs 1.65 lakh crore. However, the brokerage trimmed its target price to Rs 4,958 on the stock.