Defence PSU Giant HAL Stock Drops; Should You BUY? Motilal Predicts 19% Potential Upside

HAL Shares: Shares of Hindustan Aeronautics Limited (HAL) were trading more than 3% lower today as the Indian stock market continued its downward trajectory on Friday. The defence PSU stock has a 19% upside potential in the coming months, according to Motilal Oswal.

The stock brokerage firm, on Thursday, reiterated its stance on the defence PSU stock and initiated a 'Buy' call for HAL shares. According to MOFL, HAL shares are well positioned in the defence segment which is likely to grow in future.

HAL Share Price Trend: How Much Defence PSU Has Gained So Far?

The Hindustan Aeronautics Limited stock value has declined in the past one week. HAL scrip was trading 3.14% lower on BSE at Rs 4164 per share on Friday at 11:40 am. Its market capitalisation stood at Rs 2,78,477.91 crore. HAL scrip touched its all-time high mark of Rs 5,675 apiece on 9 July, 2024. The company stock is currently recovering as it dipped to its 52-week-low mark of Rs 3,045.95 apiece on 3 March, 2025. The stock value has surged nominally by 0.33% since the beginning of 2025 and has increased by 4.59% in one year.

HAL Share Price Recommendation: Motilal Oswal Remains Upbead on Defence PSU Stock

Motilal Oswal has initiated a 'Buy' call for HAL with a target price of Rs 5,100, indicating an upside of 19%. HAL stock is currently trading at "34.0x/27.6x FY26E/FY27E EPS" according to MOFSL.

"We continue to remain upbeat on the defense aerospace segment and believe that HAL would now have to focus on execution, given some of the major supply chain issues are broadly under control. We retain our positive stance on the Defense sector and reiterate our BUY rating on the stock with a TP of INR5,100, based on Mar'27 estimates," noted Motilal Oswal in its latest report on Friday.

The Total Addressable Market (TAM) for HAL is likely to remain strong as the defence sector aviation firm has a medium-term pipeline of Rs 2.4 trillion for HAL, and the overall long-term TAM remains around Rs 6 trillion.

"We believe that over the next 2-3 years, the TAM for HAL will remain strong where initial groundwork on prototypes is already being done by HAL for projects such as follow-on orders from Tejas Mk1A (97 aircraft) worth INR650b, Su-30 Mk1 (84 aircraft) worth INR630b, followed by LUH and NUH orders, and subsequently Tejas Mk2," read MOFSL's note.

HAL Stock: What Are The Key Risks For Defence PSU?

Apart from strong potential for the defence PSU stock, its business growth is likely to be impacted by 'slower-than-expected' finalisation of large platform orders, further delays in deliveries of key components like engines for Tejas Mk1A, payment delay from Ministry of Defence (MoD), and heightened competition from private players.

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