Motilal Oswal’s Bullish Call Ignites Rally in HAL Shares
Shares of Hindustan Aeronautics Ltd (HAL) jumped as much as 3 percent on April 11, reaching ₹4,142 on the NSE after Motilal Oswal Financial Services initiated coverage on the stock with a ‘Buy’ rating and a price target of ₹5,100. This implies a potential 27% upside from the previous close and signals a resumption of bullish momentum in the state-run aerospace major.
The new target, while optimistic, still trails HAL’s all-time high of ₹5,674.75 touched in July 2023, suggesting substantial recovery potential. HAL’s stock has already climbed nearly 20 percent in the past month, driven by favourable commentary around India’s increased defence allocations and manufacturing push under Atmanirbhar Bharat.
Highlights:
Motilal Oswal initiates with ‘Buy’; target price ₹5,100.
HAL stock rises 3% intraday; up nearly 20% in the last month.
Strong order book of ₹1.8 lakh crore and large opportunity pipeline drive optimism.
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Robust Order Book and Platform Pipeline Fuel Growth Thesis
Motilal Oswal’s thesis rests heavily on HAL’s sector dominance in defence aviation, citing its robust ₹1.8 lakh crore order book as of March 2025 and an additional ₹6 lakh crore in pipeline opportunities. The firm expects HAL to be a major beneficiary of India’s accelerating capital expenditure on indigenous defence procurement and export potential.
Key drivers for future revenue include the Tejas Mk1A and Mk-II jets, the Light Utility Helicopter (LUH), and the long-awaited Advanced Medium Combat Aircraft (AMCA) program. Near-term triggers include resumed deliveries as engine supply issues ease, thanks to renewed support from General Electric (GE).
Highlights:
Active order book of ₹1.8 lakh crore; pipeline worth ₹6 lakh crore.
Key growth drivers: Tejas Mk1A, Tejas Mk-II, LUH, AMCA.
Engine supply resumption from GE to revive delivery momentum.
Financials Set to Take Off: Revenue, Margins, and Returns in Focus
HAL’s financials are projected to witness strong top-line and bottom-line growth, with revenues forecast to grow at a 29% CAGR between FY25–FY27. Motilal Oswal expects EBITDA margins to improve from 25.9% in FY25 to 27.6% by FY27, driven by operating leverage, greater indigenisation, and enhanced product mix.
HAL’s net profits are projected to grow in sync with revenues, thanks to stable working capital and annual capex investments of ₹3,000–5,000 crore. Return ratios are also expected to remain elevated, with RoE pegged at 22.5% and RoCE at 23.2% by FY27.
On a valuation basis, HAL currently trades at 31.9x FY26E EPS and 25.9x FY27E EPS, which Motilal deems attractive given the scale of opportunity, execution strength, and growth visibility.
Highlights:
Revenue CAGR of 29% (FY25–FY27); EBITDA margin to rise to 27.6%.
RoE and RoCE seen at 22.5% and 23.2%, respectively, by FY27.
Valuation: 31.9x FY26 EPS and 25.9x FY27 EPS.
Risks Highlighted: Delays, Competition, and Payment Lags
Despite the bullish stance, Motilal Oswal outlined potential headwinds that could affect HAL’s performance. These include delays in finalising large defence contracts, slower-than-expected Tejas engine supplies, payment lags from the Ministry of Defence, and increased private sector participation, which could erode HAL’s monopolistic advantage in select segments.
While HAL enjoys a dominant position today, the emergence of private players under India’s Make-in-India program introduces an element of long-term competitive risk.
Highlights:
Delays in large defence deals could hit revenue timelines.
Engine supply and Ministry payment delays remain short-term risks.
Rising private sector presence in aerospace could pose competition.
