Hindustan Aeronautics Limited (HAL) is a renowned name in the defense sector. The company designs, maintains, and manufactures aerospace structures, aircraft, avionics, and helicopters. Over the years, HAL has also diversified its offerings by focusing on both domestic and international markets.
However, from an investment perspective, many investors still wonder whether HAL should be part of their portfolio. Let’s address this by discussing its financials and growth drivers.
Hindustan Aeronautics Limited Growth Drivers
HAL’s growth is primarily driven by the orders it has secured in recent months. Here are the details.
1. Hindustan Aeronautics Limited Financials
In the first quarter of the financial year 2024-25, this Nifty Next 50 Index company posted a profit of ₹1,437.16 crore, an improvement from ₹814.24 crore in the same quarter of the previous financial year. The revenue also surged by 11.04% to ₹4,347.50 crore compared to the same quarter of the last year.
Regarding HAL share price movement, the company has delivered an impressive return of 128.66% over the past year. It is trading at around ₹4470+ as of September 2024.
2. Indian Navy’s Dornier Aircraft
On 15 March 2024, HAL signed a ₹2,890 crore contract with the Ministry of Defence for the mid-life upgrade of the Indian Navy’s 25 Dornier aircraft. Under the deal, HAL will enhance the operational capability of these aircraft for improved coastal and maritime surveillance and electronic intelligence capabilities.
In addition, HAL will focus on upgrading secondary roles such as medical/casualty evacuation, search and rescue, and establishing communication links.
3. LCA Mark 1A Fighter Jets
On 12th April 2024, HAL secured another contract from the Ministry of Defence, this time for procuring 97 LCA Mark 1A fighter jets. With an order value exceeding ₹65,000 crore, this deal represents the largest order by the Indian government for indigenous military equipment.
Regarding the aircraft, the LCA Mark 1A is an advanced variant of the Light Combat Aircraft. Its primary role is to enhance the combat capability of the Indian Air Force.
4. Collaboration with SAFHAL
HAL and SAFHAL have recently agreed to develop the Aravalli engine. This engine is set to power two new helicopter platforms: the Indian Multi-Role Helicopter (IMRH) and the Deck-Based Multi-Role Helicopter (DBMRH).
The collaboration aims to improve India’s aerospace and defense capabilities, aligning with the “Atma Nirbhar Bharat” vision. The Aravalli engine signifies a substantial leap in helicopter engine technology, promising superior power, adaptability, and performance.
5. IAF SU 30 MKI Fleet
Another recent development is the Indian government’s approval in September 2024 of a contract to procure 240 AL-31FP aero-engines for the Su-30 MKI fleet. This contract, valued at over ₹26,000 crore, is aimed at upgrading the operational capabilities of the IAF’s Su-30 MKI fighter jets.
The engines will be manufactured at HAL’s Koraput division, with more than 54% of components being indigenously produced. Deliveries will begin within a year and last eight years.
6. Hindustan Aeronautics Limited Global Reach
HAL’s operations are not limited to the domestic arena; the company also has a significant global reach. During the financial year 2023-24, HAL signed an export contract with the Guyana Defence Force for the delivery of two Hindustan-228 aircraft.
Impressively, these aircraft were delivered within a month of signing the contract.
All these factors make HAL one of the most preferred investment options for investors.
Conclusion
HAL’s remarkable growth, strategic alliances, and solid financial performance position it as a promising investment opportunity. However, as an investor, you must also weigh the risks and challenges inherent in the aerospace and defense industries.
