PSU defence stock to buy now for an upside potential of more than 30%; Do you own it?  

As per the source, the Aerospace and Defense sector in India is poised for significant growth, valued at USD 27.1 billion in 2024 and projected to reach USD 54.4 billion by 2033, reflecting a CAGR of 6.99%. This expansion is driven by increased defense budgets and a focus on indigenous manufacturing, addressing national security needs effectively. 

Price Movement 

With a market capitalization of Rs 2.41 lakh share, the shares of Hindustan Aeronautics Ltd were trading at Rs 3,617.00 per share, increasing around 1.06 percent as compared to the previous closing price of Rs 3,579.05 apiece. 

Brokerage Recommendations 

UBS, one of the well-known brokerages globally, gave a ‘Buy’ call on the defence stock with a target price of Rs 4,800, indicating a potential upside of 33 percent from Wednesday’s price of Rs 3,617 per share. 

Brokerage Rationale 

UBS expects FY26 to be a turning point for defence orders, benefiting HAL’s subsidiary, Hindustan Aeronautics Next-Gen Aerospace Ltd. (HNAL). HNAL’s order book could triple by FY27, with steady execution in FY26-27. This growth trajectory suggests a 19 percent CAGR in revenue and earnings over the period. 

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Order Book 

HAL’s order book is expected to rise to Rs 1.25 lakh crore by FY25. As of March 31, 2024, the company’s order book stood in excess of Rs 94,000 crore, with additional major orders expected during FY25. 

Future Projections 

HAL expects revenue growth of 15-18 percent from FY25 to FY28, supported by ongoing projects and advancements in both military and civilian aerospace sectors. The company is actively addressing production delays attributed to technical challenges and remains committed to fulfilling its delivery schedules, including plans to deliver 11 Tejas Mk1A aircraft by March 2025. 

Company profile 

Hindustan Aeronautics Limited is an Indian firm that designs, develops, manufactures, repairs, overhauls, upgrades, and services a variety of goods such as airplanes, helicopters, aero-engines, avionics, accessories, and aerospace structures. 

Written by Abhishek Singh

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