HAL share price: UBS raises target, sees 30% upside post Rs 62,700 crore order

Hindustan Aeronautics Ltd (HAL) ended FY25 with strong beat on orders, as the Cabinet committee cleared order for 156 Prachand (light combat helicopter) order worth Rs 62,700 crore, which surprised analysts.
Foreign brokerage UBS, which has upped its target on HAL and sees the stock rising 30 per cent going ahead, said awarding of the order was a positive surprise as it anticipated the order value at Rs 45,000 crore. Besides, the brokerage had expected the order to be awarded in Q1FY26.

"Commencement of engines delivery by GE with accelerated delivery schedule should address issues around execution and recent fast tracking of award for LCH Prachand should address concerns around slowing defence spend," UBS said.

UBS does not expect procurement of fifth generation fighter aircraft via FMS (foreign military sales) to have material impact on HAL's total addressable market. It raised its 12-month forward PE for HAL to 35 times from 32 times, still at 10 per cent discount to BHE, and with revised price target of Rs 5,440 and HAL is UBS' preferred pick in the broader industrial coverage. The brokerage had a target of Rs 4,800 on UBS earlier. The fresh target is 13.33 per cent higher than the previous target and suggests 30.26 per cent upside ahead.  

The execution of Prachand order as per terms is expected to start from the third year of awarding and execution to be completed over a period of five years. The P&L translation should start from end FY28 while HAL have an execution capacity of 30 LCH annually, UBS said.

LCH Prachand is expected to have a 65 per cent indigenous content further strengthening domestic ecosystem for defence manufacturing.

"We expect FY26 to be an inflection year for defence ordering and recent acceleration in pace of decision making adds further comfort to our view. Defence procurement is bottom up and concerns around recent slowdown in government capex impacting defence spend are misplaced, in our view," UBS said.