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Business News/ Markets / Stock Markets/  Multibagger defence PSU hits upper circuit as Defence Ministry issues tender worth 65,000 crore for fighter jets
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Multibagger defence PSU hits upper circuit as Defence Ministry issues tender worth ₹65,000 crore for fighter jets

HAL Share Price: Shares of defence major HAL hit over three per cent upper circuit at record-high after the government placed the largest order for indigenous military hardware

HAL won a tender worth ₹65,000 crore from the Defence Ministry (Mint)Premium
HAL won a tender worth 65,000 crore from the Defence Ministry (Mint)

HAL Share Price Today: Shares of public-sector undertaking (PSU) Hindustan Aeronautics Ltd or HAL rose more than three per cent to hit a lifetime record-high mark during intra-day on Friday, April 12. HAL has given multibagger returns to investors over the last one-to-three year time periods.

The surge in shares came as the Defence Ministry today issued a tender to the defence major for buying made-in-India 97 LCA Mark 1A fighter jets. The tender is expected to be worth over 65,000 crore and is set to be the largest order for indigenous military hardware to be placed by the central government ever.

Also Read: Govt to buy 34 advanced light choppers from Hindustan Aeronautics for 8,073 crore

Defence Ministry issues 65,000 crore-tender

The tender was issued by the Defence Ministry to the PSU major recently and they have been given three months to respond to it. The programme will help the IAF to replace its fleet of MiG-21s, MiG-23s and MiG-27s which have been either phased out or are set to be phased out in the near future.

The indigenous fighter aircraft programme, fully backed by Defence Ministry and Air Headquarters is set to be a big boost for promoting indigenisation as well as give major business to the small and medium enterprises engaged in defence business across the country, government officials told news agency ANI.

Prime Minister Narendra Modi has been pushing for the revival of the HAL which has bagged orders for building all types of indigenous fighter aircraft, helicopters along with the engines for them under his government.

Also Read: Multibagger stock Hindustan Aeronautics scales 52-week high on a large order win worth Rs. 1173 Cr from Cochin Shipyard

The plan to acquire 97 more LCA Mark 1A fighter jets was also announced first by the Air Force chief Air Chief Marshal VR Chaudhari on foreign soil in Spain when he told ANI about the mega plans to boost the indigenous fighter aircraft orders.

The decision to buy 97 more of these planes came around after the Air Chief held a review meeting of the indigenous fighter jet programme with all entities involved including HAL. The indigenous content in the new LCA Mark1As is going to be more than 65 per cent.

HAL Share Price Today

Shares of HAL opened at 3,564.65 and were locked at over three per cent upper circuit to hit a fresh 52-week high-mark of 3,677, before settling 2.05 per cent higher at 3,637.90 apiece on the BSE. According to Trendlyne data, HAL has given better returns compared to Nifty 50 and Sensex in the last one year. In the past one month, HAL gave 11.34 per cent returns, against 0.11 per cent and 0.17 per cent returns by Nifty 50 and Sensex respectively.

Also Read: India is broadening its military footprint, to send defence attaches to more nations across Africa and Asia: Report

In the last one year, HAL has given 158.8 per cent returns to investors as against 27.78 per cent and 24.06 per cent returns by Nifty 50 and Sensex respectively. HAL is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.

Brokerage maintains ‘hold’ on HAL stock

Domestic brokerage firm Prabhudas Lilladher said that the issue of the tender improves visibility on HAL’s order inflow and long-term execution. The brokerage believes that HAL is a long-term play on the growing strength and modernization of India’s air defence due to the following factors:

-It is the primary supplier of India’s military aircraft
-Long-term sustainable demand opportunity owing to government’s push on indigenous procurement in defence
-Leap in HAL’s technological capabilities due to development of advanced platforms (Tejas etc)
-Robust order book with further five-year pipeline of over 2 trillion
 -Improvement in profitability via scale and operating leverage.

‘’The stock is trading at a P/E of 39.9x/35.2x on FY25/26E earnings. We have a ‘hold’ rating on the stock,'' said Prabhudas Lilladher in its analysis today.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 12 Apr 2024, 06:50 PM IST
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