Brokerage firm Elara Securities has upgraded the defence PSU stock Hindustan Aeronautics Limited (HAL) from ‘Accumulate’ to ‘Buy’ after the company reported Hindustan Aeronautics Limited (HAL) from ‘Accumulate’ to ‘Buy’ after the company reported 52 per cent year-on-year (YoY) rise in its net profit to ₹4,308.7 crore for the fourth quarter results (Q4 FY24).
The brokerage firm has also raised the target price of the PSU defence stock from ₹4,100 to ₹5,590. “We revise to Buy from Accumulate, with a higher TP of INR 5,590 from INR 4,100 based on 45x (from 35x) March 2025E P/E as we roll forward. Our revised TP is driven by expectations from a new stream of the exports business, the surge in inflows of INR 1.6tn, rising margin, and sustained double-digit earnings growth,” Elara Securities said in a note.
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It added, “We believe in the rising share of indigenisation. Unexplored export opportunities in the aircraft and helicopter industry warrant a rerating. We expect an earnings CAGR of 17% during FY24-26E with an ROE of 24% during FY25-26E. Key risks to our call include lower spending in the defence capital budget, less domestic procurement allocation, increased competition from the private sector, and delay in execution.”
For the financial year 2024, Hindustan Aeronautics reported a revenue of ₹30,380 crore, an increase from the provisional figure of ₹29,810 crore announced on April 1.
EBITDA for the quarter increased substantially by 81.8% from the previous year to ₹5,901.1 crore, compared to ₹3,245.8 crore in the same period last year.
Throughout the year, HAL secured major orders exceeding ₹19,000 crore and repair and overhaul contracts worth over ₹16,000 crore.
HAL stock has rallied over 119.89 per cent on the National Stock Exchange (NSE) in the last six months and 204.27 per cent in the previous year.
When asked about the performance of PSU stocks in the stock market, PM Modi also pointed to the remarkable performance of state-run company stocks as a testament to the nation’s economic strength.
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“Look at where the PSU companies’ shares have reached today. PSU shares were once synonymous with falling prices. But now, in the stock market, their value is rising several times. Look at HAL (Hindustan Aeronautics Ltd)—it posted a record profit in the fourth quarter of ₹4,000 crore,” PM Modi was quoted as saying by Moneycontrol.
HAL shares ended 2.42 per cent higher on Friday, last week to ₹4,715.05, against the previous close at ₹4,603 on Thursday.
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Published: 20 May 2024, 05:20 PM IST
