1400% returns in 5 years! Motilal Oswal predicts 26% more rally, giving ‘buy’ tag to THIS defence PSU stock

HAL share price gained over 2% on Friday amid heavy buying momentum. HAL shares rallied as much as 2.2% to ₹4,120 apiece on the BSE. The gains in HAL share price comes after domestic brokerage Motilal Oswal Financial Services (MOFSL) initiated coverage on the defence stock, expecting an upside potential of more than 26% from previous closing price.

MOFSL has initiated coverage on HAL shares with a ‘Buy’ rating and a target price of ₹5,100 per share, based on an average of DCF and 32x P/E on March 2027 estimates.

Hindustan Aeronautics Ltd (HAL) is a defence PSU stock and market leader in aerospace defense. It boasts a strong order book of ₹1.8 lakh crore as of 31 March 2025, along with a pipeline of ₹6 lakh crore, which is likely to be awarded over the next few years.

“The company is transitioning from a traditional licensed model to an indigenized model and is currently working on marque projects such as Tejas Mk1, Tejas Mk1a, Su-30 upgrade, Dornier-25, and Light Utility Helicopter (LUH), et al. These projects are anticipated to fuel manufacturing revenue growth for HAL,” MOFSL said in a report.

It expects HAL to benefit from a strong pipeline of projects, execution scale-up aided by large platform orders, a stable stream of RoH revenues, backward integration, and a healthy 29% revenue, 33% EBITDA and 29% PAT CAGR over FY25-27.

MOFSL believes that the near-term catalysts will emerge when aircraft deliveries commence as engine supplies from GE resume, while medium- to long-term triggers will stem from the finalization of orders for 97 Tejas-Mk1A, Tejas MK-II, LUH, Advanced Medium Combat Aircraft (AMCA), et al.

HAL Share Price Trend

HAL share price has rallied 18% in one month, but the defence stock is down 2% on a year-to-date (YTD) basis. In the past one year, HAL shares have risen nearly 15%.

In the long-term, the PSU defence stock has delivered multibagger returns. HAL stock price has jumped 190% in two years and nearly 1,400% in the past five years. 

At 10:15 AM, HAL shares were trading 1.88% higher at ₹4,107 apiece on the BSE.

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