BackGladiator stock: Near its 52-week high, HAL may gain up to 14%
The brokerage expects the stock to accelerate upward momentum and head towards ₹3,240 as it is the implied target of past three month's consolidation (2800-2300)
PremiumCurrently, Hindustan Aeronautics (HAL) shares are near their 52-week high, after the aerospace and defence company sealed a deal worth ₹6,800 crore with the defence ministry. The stock has potential to rally further, analysts suggest an estimate of 14% upside from the current levels.
The defence sector has regained upward momentum after forming a higher base over past three-four months. Within the space, domestic brokerage house ICICI Direct says HAL has been the resilient candidate which has logged a resolute breakout from three months consolidation (2800-2300), indicating resumption of primary up trend.
The brokerage, in a report, said it offers a fresh entry opportunity to ride the next leg of the up move.
The brokerage has initiated a "Buy" action on Hindustan Aeronautics with a buying range between ₹2,785-2,835 and a target price of ₹3,240. This represents an upside of 14% and the time frame given is 3 months. Stop loss can be kept at ₹2,580.
It expects the stock to accelerate upward momentum and head towards ₹3,240 as it is the implied target of past three month's consolidation (2800-2300).
Fundamental outlook
“HAL has a healthy order-book position of | 84000 crore as of December 2022 (3.2x TTM revenues) led by large scale orders in manufacturing segment (Light Combat Aircraft Tejas MK1, HTT-40 Light Combat Helicopters, Advanced Light Helicopters) and engines," the brokerage said.
It expects HAL to deliver revenue and EBITDA CAGR of 10.3% and 14.8%, respectively, over FY22-25E. PAT is likely to grow at 12% CAGR over the same period. Increase in profitability with strong asset turnover is expected to result in healthy return ratios over FY23-25.
“Key point to highlight is that the stock has formed a higher base above 100 day’s EMA and subsequently witnessed a faster pace of retracement wherein it retraced the preceding 10 week’s decline in just four weeks, highlighting the robust price structure," the report said.
HAL shares touched a lifetime high of ₹2,887.5 apiece on 8 March. On Thursday, the stock was trading 0.70% lower at ₹2,843.10 apiece on the NSE. The stock is up more than 112.95% in a year's period.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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