HAL soars 6%, hits 52-week high as MoD okays acquisitions worth Rs 8,722 cr

Of the Rs 8,722 crore worth of acquisitions, bulk will go towards purchasing the first fixed wing aircraft that HAL has designed and developed in decades

Shares of Hindustan Aeronautics (HAL) rallied as much as 5.8 per cent and hit fresh 52-week high of Rs 1,078 on the BSE on Wednesday after the Ministry of Defence (MoD) on Tuesday approved the acquisition of 'Make in India' equipment worth Rs 8,722 crore. Of this, bulk will go towards purchasing the first fixed wing aircraft that HAL has designed and developed in decades.

At 10:35 am, the stock was trading 4.8 per cent higher at Rs 1,068 on the BSE, as against 0.48 per cent decline in the S&P BSE Sensex. So far in the month of August, the stock of HAL has zoomed 14 per cent till Tuesday, as against4 per cent rally in the benchmark Sensex.

“The Defence Acquisition Council (DAC), in its meeting held [with] Defence Minister Rajnath Singh, accorded approval for capital acquisitions of various platforms and equipment required by the Indian Armed Forces. Proposals for an approximate cost of Rs 8,722.38 crore were approved... [With] prototypes and certification process underway, the DAC approved procurement of 106 basic trainer aircraft (BTA) from HAL to address the basic training requirements of the IAF. Post certification, 70 BTA will be initially procured from HAL and balance 36 after operationalisation of HTT-40 fleet in IAF,” stated the MoD. READ HERE

MoD sources say the HTT-40’s cost has been fixed at approximately Rs 50 crore, which means the acquisition cost of the entire fleet will come to about Rs 5,300 crore. The IAF was pushing for the acquisition of 38 more Pilatus PC-7 Mark II basic trainers from Switzerland, to supplement its existing fleet of 75 aircraft. However, HAL’s rapid success in developing the HTT-40 has ensured that the additional BTAs will all be Indian.

HAL sources say the HTT-40 is in the final stages of spin trials, the make-or-break capability demonstration for a basic trainer. Production planning for building the trainer is already underway.

On August 9, MoD had announced a phased, year-wise embargo on the import of 101 items of defence equipment, invoking the Prime Minister Narendra Modi’s Atmanirbhar Bharat (Self-Reliant India) initiative. "Our aim is to apprise the Indian defence industry about the anticipated requirements of the Armed Forces so that they are better prepared to realise the goal of indigenisation," said Defence Minister Rajnath Singh. 

"The estimated embargo list to enable estimated Rs 4 lakh crore worth of contracts would be placed to the domestic industry over the next five to seven years. This comes to average contract of Rs 57,000 crore to Rs 80,000 crore per annum. This would provide significant thrust to defence manufacturing companies in scaling up their production capabilities in long term," said analysts at ICICI Securities in a note dated August 10.