Up 120% In 12 Months: This Defense Stock Rises After Orders From The MoD Totaling Rs 8,000 Crore
With two ground-breaking contracts worth Rs 8,073 crore signed by the Ministry of Defense, Hindustan Aeronautics Limited (HAL) is set for a bull market boom. When markets open on March 14, it is anticipated that a spike in HAL shares will result from the contracts, which are intended to purchase 34 cutting-edge light helicopters and related equipment for the Indian Army and Coast Guard.
This year, the stock value of HAL, a mainstay in the military industry, has increased by more than 8%, outpacing the 0.7% increase in the benchmark Sensex. On March 11, the company’s shares reached a 52-week high of Rs 3,428 per share.
The purchase of cutting-edge light helicopters under the Indian-IDDM (Indigenously Designed, Developed, and Manufactured) category was praised by the Defense Ministry as a major step in strengthening domestic defense manufacturing capabilities. Of the 34 Dhruv Mk-III helicopters, 25 are designated for the Army, while nine are scheduled for the Coast Guard.
The Ministry predicts an increase in employment of an estimated 190 lakh man-hours throughout the project’s lifespan, highlighting the socio-economic effect. Furthermore, it is anticipated that the process of indigenization will include approximately 200 micro, small, and medium-sized enterprises (MSMEs), with the participation of 70 local suppliers, therefore promoting the development of jobs in the industry.
The analysts at InCred Equities have reiterated their belief in HAL by keeping a ‘add’ rating on the company’s shares and increasing the target price from Rs 2,500 to Rs 3,680. This confidence stems from the company’s strong order pipeline, better working capital situation, and improved profit profile.
Analysts do, however, issue a warning on some risks, including as pressure on margins, delays in aircraft delivery schedules, and delays in receiving new orders. Notwithstanding these difficulties, HAL is still a key player in India’s defense industry and the country’s leading domestic manufacturer of aircraft, according to the brokerage business.
The contracts demonstrate a major step towards the nation’s goal of being self-sufficient in defense manufacturing, which is a cornerstone of HAL’s position as a major participant in the defense sector. With the market opening on March 14 rapidly approaching, all eyes are on HAL shares, which should rise in the positive mood created by these historic accords.
As of 10:05 a.m., the shares of Hindustan Aeronautics were trading on the National Stock Exchange (NSE) at Rs 3,112 a share, up more than 2%. Throughout the last year, the stock has increased by about 120%.
