Defence PSU Stock HAL Soars 4%; Jefferies Sees 21% Upside, Morgan Stanley Signals Strong Buy

Shares of Hindustan Aeronautics Limited (HAL) were in focus on Wednesday, March 26, 2025, as the stock surged 4.30%, reaching an intraday high of ₹4,163 per share. This jump came despite a broader market downturn, with the Sensex falling by 750 points and the Nifty 50 slipping 190 points to trade at 23,477. HAL shares gained investor attention after the company received deliveries of the Tejas LCA aircraft.

HAL Share Price Update

Following the announcement, HAL's share price reacted swiftly, surging 4% to ₹4,149.90 at the time of writing. The stock has gained 28% in the past month, riding the momentum seen across defence stocks like BEL, GRSE, and Cochin Shipyard.

What is behind the surge in HAL share price?

Hindustan Aeronautics Limited (HAL) stock surged after reports confirmed that GE Aerospace, a leading aerospace company based in Ohio, USA, has delivered the first of 99 F404-IN20 engines for India's Tejas Light Combat Aircraft (LCA) Mk 1A.
Hindustan Aeronautics Ltd (HAL) has been facing delays in delivering the LCA Tejas Mk1A jets due to late engine shipments from GE Aerospace. Originally scheduled for August 2023, the engine deliveries were pushed back first to September 2024, then November 2024. However, since October 2024.

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Hal Share Price Target

According to Jefferies, the LCA Tejas Mk1A order makes up 49% of HAL's ₹94,100 crore order book as of March 2024 and 35-40% of its current ₹1.2 trillion order book. In 2021, HAL placed an order for 99 F404-GE-IN20 engines from GE Aerospace for $716 million to power the Mk1A jets. However, supply chain disruptions delayed the deliveries by over 1.5 years, pushing HAL's aircraft delivery timeline from FY24-29 to FY26-30.

The delay happened because GE had shut down its production line a few years ago and had to recertify vendors and components before resuming deliveries. However, with GE stabilising production, deliveries are expected to pick up gradually.
Despite these setbacks, analysts remain positive about HAL's growth, maintaining a BUY rating with a price target of ₹4,715, suggesting a 21% upside from the current price of ₹3,888.75.

Recently, the Defence Acquisition Council (DAC) approved military projects worth ₹54,000 crore to strengthen the Indian Armed Forces.

Following this development, Antique Broking maintained a BUY recommendation for key defence sector companies. Their price targets for major Defence Public Sector Undertakings (DPSUs) under coverage are ₹19,639 for PTCIL, ₹4,887 for HAL, ₹2,757 for Mazagon Dock (MAZDOCKS), ₹376 for Bharat Electronics (BHE), and ₹1,351 for Bharat Dynamics (BDL).
A Morgan Stanley report highlighted that Hindustan Aeronautics Limited (HAL) is set for strong growth, fuelled by engine upgrades, new defence orders, and increasing exports. The broking has retained its "overweight" rating on the stock, with a bullish price target of ₹5,292, indicating a potential 32% upside.

About Hindustan Aeronautics Ltd.

Hindustan Aeronautics Limited (HAL) is India's premier aerospace and defence company, specialising in the design, development, and production of military aircraft, helicopters, avionics, and defence-related equipment. Founded in 1940 and headquartered in Bengaluru, HAL operates under the Ministry of Defence and plays a vital role in supplying fighter jets like the Tejas (LCA), Sukhoi Su-30MKI (under licence), and Jaguar, along with helicopters like the Dhruv (ALH) and Light Combat Helicopter (LCH) to the Indian Armed Forces. The company is also involved in aircraft engine production, avionics, radars, and MRO (Maintenance, Repair, and Overhaul) services. HAL has strategic partnerships with global aerospace firms such as GE Aviation, Boeing, and Rolls-Royce and is a key player in India's "Make in India" initiative, focusing on indigenous defence manufacturing. With a strong order book that includes the LCA Tejas Mk1A program and future projects like the Advanced Medium Combat Aircraft (AMCA) and UAV technology, HAL is positioned as a cornerstone of India's defence sector, driving self-reliance in aerospace and military advancements.

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