Buy Hindustan Aeronautics, target price Rs 2618: ICICI Securities

has buy call on Hindustan Aeronautics with a target price of Rs 2618. The current market price of is Rs 1753. Time period given by analyst is one year when . price can reach defined target.


Hindustan Aeronautics Ltd., incorporated in the year 1963, is a Large Cap company (having a market cap of Rs 58153.33 Crore) operating in Defence sector.

Hindustan Aeronautics Ltd. key Products/Revenue Segments include Sale of services, Engineering Goods, Spares And Others, Development Projects, Other Operating Revenue and Miscellaneous for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 12061.79 Crore, up 98.10 % from last quarter Total Income of Rs 6088.66 Crore and up 10.96 % from last year same quarter Total Income of Rs 10870.24 Crore. Company reported net profit after tax of Rs 3103.99 Crore in latest quarter.

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Investment Rationale
THe brokerage sees the possibility of ~US$5bn+ export order for Hindustan Aeronautics (HAL) across defence aircraft contracts for Egyptian, Malaysian and Nigerian air force. Finalisation of the order can lead to further rerating in HAL. Pickup in domestic ordering has allowed economies of scale, allowing for better price offering globally. Significant scale up of RoH and MRO revenues and experience with Russian platforms allow HAL a potential customer set in Indian ocean region, MENA and LAT-Am. A mature portfolio of products in fixed wing and rotary wings allow relevance even in the face of intense global competition (e.g. TAI of Turkey turning out to be a broad-based competitor to HAL). Keeping Russian supply lines open while continuing to court western cooperation for new product development (case in point being Safran’s recent involvement in development of IMRH engines) and warding off any threats to the products where there are western components are key to nurturing future export ambitions.

Promoter/FII Holdings
Promoters held 75.15 per cent stake in the company as of 30-Jun-2022, while FIIs owned 13.72 per cent, DIIs 7.55 per cent.

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