HAL Share Price Hits Record Highs After Strong Q4 Earnings and UBS Upgrade

Hindustan Aeronautics Limited or HAL shares soared to all time high of ₹4,656.4 marking a 10% surge on 16 May. This remarkable leap follows a series of gains over the past five days. In the last six months, HAL's stock has more than doubled skyrocketing by 120%. This exceptional performance far outpaces the modest 13% gain of the Nifty 50 index

Strong Q4 Results

HAL's bullish trajectory was propelled by its robust fourth quarter results. The state owned defense PSU reported a net profit of ₹4,309 crore for Q4 a staggering 52% increase compared to the previous year. Net sales for the quarter also saw an uptick climbing by 18% to ₹14,769 crore from ₹12,495. EBITDA margin expanded to 40% from 26% in the corresponding quarter of the previous year. EBITDA nearly doubling from the previous year, surged by 81.8% to ₹5,901.1 crore.

UBS Raises Target Price

Adding to the optimism global brokerage firm UBS maintained a buy rating on HAL and raised the target price to ₹5,200 per share from ₹3,600. Analysts at UBS cited an earnings upgrade, underpinned by HAL's improved order book scale up, reduced competition and enhanced export potential. The firm foresees HAL delivering 8-10 trainer and fighter versions of the LCA-MK1A or Tejas in FY25E followed by the fulfillment of orders for 12 new SU-30 MKI aircraft, 156 LCH Prachand combat helicopters and 240 AL 31FP engines for the SU-30 by FY25E.

Looking ahead, UBS analysts anticipate an uptick in HAL's order book and manufacturing revenue growth. They project a three fold increase in the order book and a 25 percent revenue growth in manufacturing topline from FY23-27E. Factors such as government emphasis on defense manufacturing, capacity expansion and confidence in domestically designed platforms are expected to drive HAL's success over the coming decade.

According to YES Securities, it's a good idea to consider buying HAL shares if they dip to the range of ₹4,000-4,050. He suggests setting a stop loss at ₹3,670 to manage risk and targeting an upside of ₹4,750.

Gaurav Dua, Senior Vice President and Head of Capital Market Strategy at Sharekhan by BNP Paribas believes HAL is a stock worth holding onto. He sees it as a long term opportunity, especially with its potential to benefit from the defense sector's move towards import substitution. Dua predicts gains from HAL over the next 2-5 years.

Final Words

Hindustan Aeronautics Limited or HAL, is looking towards a bright future. Its strong financial performance, backing from global brokerage firms like UBS and supportive regulations are setting the stage for success. HAL has a solid lineup of orders its abilities are growing and the market conditions are favorable. All these factors position HAL to become a top player in the aerospace and defense industry.