Hindustan Aeronautics market cap crosses ₹2 lakh crore mark; shares jump 6%

Hindustan Aeronautics (HAL), known for manufacturing the Tejas fighter jet, saw a major spike in shares on Friday. The market valuation of the company jumped past the 2 lakh crore mark.

HAL share prices jumped up by 6 percent on Friday.(X)
HAL share prices jumped up by 6 percent on Friday.(X)

On January 5, the shares of Hindustan Aeronautics saw a spike of 6 percent, touching record high over the last one year. On the National Stock Exchange (NSE), the HAL share price jumped to 3078.8 on Friday.

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This comes after a total of 31,57,100 equity shares worth 954.6 crore changed hands so far in HAL. The fighter jet maker has been falling flat on the share market over the last couple of years, but the sudden spike in shares has been credited to a recent report by global brokerage UBS.

UBS initiated coverage on the stock with a ‘Buy’ rating, expressing faith that Hindustan Aeronautics has high potential in the global defence markets. The brokerage said that HAL’s projected share price can be 3600, which is 23.88% more than Thursday’s closing price.

UBS further predicted that after a flat growth over the last few market sessions, HAL is expected to triple its order book from 80,000 crore in FY23 to 2.4 lakh crore in FY26E. The brokerage said that HAL can re-rate with a similar magnitude to the growth of BHEL.

Currently, HAL has a USD 10 billion order book, and USB said that it needs more orders of defence aircrafts of estimated $60 billion from now to FY2028 to triple its growth over the next 5-7 years.

What did the UBS report say about HAL

Hindustan Aeronautics has increased its manufacturing of the Tejas Mk1A aircrafts from 8% to 16%, and is planning on expanding it up to 24% in the coming months, with new assembly lines in Bengaluru and Nashik.

UBS said in its report, “We expect the depletion of India’s military aircraft strength in the coming few years, geopolitics and a need for greater aircraft availability to accelerate ordering and lead to a manufacturing ramp-up at HAL versus the past decade.”

The brokerage further said, “It has also expanded its rotary wing platform’s manufacturing capacity to meet growing demand for locally designed and manufactured aircraft. We believe consensus estimates have not yet built in faster order completions, HAL’s ability to ramp up production and improved manufacturing value add.”

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