Renowned brokerage firm ICICI Securities recently suggested investors buying the stock of Hindustan Aeronautics (HAL) for 95% return.
The Current Market Price (CMP) of Hindustan Aeronautics is Rs. 1336. ICICI Securities has estimated a Target Price for the stock at Rs. 2618. The stock is expected to offer a 95.9% upside, in 1 year.
|Current Market Price (CMP)||Rs. 1336|
|Target Price||Rs. 2618|
|1 year return||95.90%|
The company's revenue in FY 21 was recorded at Rs. 227,545 mn, which is expected to be at Rs. 240,236 mn. Their EBITDA in FY 21 was recorded at Rs. 53,494 mn, which is expected to be at Rs. 55,469 mn. The company's Net Income in FY 21 was recorded at Rs. 32,391 mn, which is expected to be at Rs. 38,007 mn. The management has provided revenue growth guidance of ~6% YoY for FY22 and expects to maintain 24-25% EBITDA margin. The production target for FY22 is 38 aircraft (LCA, helicopters; excludes production of 6 numbers of Dornier) compared with ~44 aircraft in FY21 which were delivered.
Comments by ICICI Securities
According to ICICI Securities, "Hindustan Aeronautics (HAL) procures Rs. 40-42bn worth of spares and parts (used in ROH) from Russia, for which it has maintained inventory to cater to the requirement for at least the next 8-9 months. The company is also focusing on indigenous production of Russian supplies to reduce the import dependence (as an impact on HAL due to the Russia-Ukraine conflict). The current outstanding order book position is ~Rs. 792.3bn as at end-Dec'21 and following platforms for which AoN has been granted by the MoD and are expected to strengthen the order book by Rs. 300bn."
About the company
The Company which had its origin as Hindustan Aircraft Limited was incorporated in 1940 in Bangalore. In March 1941, the Government of India became one of the shareholders in the Company and subsequently took over its management in 1942. The manufacturing programs underway at HAL are production of SU-30 MKI, LCA & DO-228 aircraft and ALH-Dhruv, Chetak, Cheetal & LCH Helicopters. The Repair Overhaul (ROH) programs being carried out presently are Jaguar (with upgrade), Mirage (with upgrade), Kiran, HS-748, AN-32, MiG 21, Su-30 MKI, Hawk, Dornier Do-228, ALH, Cheetal, Cheetah and Chetak.
The above stock was picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.