Hindustan Aeronautics up for 6th straight day; soars 5% on healthy outlook

In the past 10 months, the stock price of HAL has zoomed 111 per cent. Moreover, from its March 2020 low, it has skyrocketed 1,016 per cent

Shares of Hindustan Aeronautics (HAL) continued their upward movement for a sixth staright trading session, hitting a new high of Rs 2,499 on the BSE, as they rallied 5 per cent in Friday's intraday trade on the back of heavy volumes.

The stock of the state-owned aerospace and defense has surged 18 per cent in the past six trading days. Moreover, in the past one month, it has soared 37 per cent as compared to a 6 per cent rise in the S&P BSE Sensex.

In the past 10 months, the stock price of HAL has more than doubled, zooming 111 per cent. Alos, from its March 2020 low, it has skyrocketed 1,016 per cent from a level of Rs 224 (adjusted to 1:1 stock split).

The average trading volumes on the counter jumped nearly two-fold today with a combined 3.4 million equity shares having changed hands on the counter on the NSE and BSE till the time of writing of this report.

HAL is engaged in the design, development, manufacture, repair, overhaul, upgrade, and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories, and aerospace structures.

On Thursday, HAL said the Defence Acquisition Council (DAC) has accorded approval in respect of Acceptance of Necessity (AoNs) for various capital acquisition proposals amounting to Rs 2.23 trillion, of which, acquisitions worth Rs 2.20 trillion (98 per cent of the total AoN amount) will be sourced from domestic industries.

This will give a substantial boost to the Indian Defence Industry towards the aim of achieving the goal of 'Aatmanirbharta', the company said in an exchange filing.

The procurement proposals include 97 LCA mark 1A fighter jets, 156 LCH Prachand choppers, an upgrade o f 84 Su-30MKI fighters. As per reports, these three proposals are worth Rs 1.6 trillion.

Apart from these, AoNs have also been accorded for Towed Gun System (TGS), medium range anti-ship missiles (MRAShM), 155 mm Nubless projectile (for artillery guns), 2 types o f anti-tank munitions and automatic target trackers, and digital basaltic computers (for T-90 tanks).

As the AoNs have been accorded, the procurement process will start including tendering and negotiations. HAL will be the primary beneficiary of contracts like LCA MK1a, LCH and Su-30 MKI upgradation, ICICI Securities said in a note.

Last month, HAL and Airbus signed a contract for establishing Maintenance, Repair and Overhaul (MRO) facilities for A-320 family of aircrafts. Under the collaboration, Airbus will supply the A-320 family tool package and offer specialised consulting services to HAL to establish MRO facility for A-320 family of aircrafts. The partnership between HAL and Airbus will support the growing demand for MRO services in the country and expand the commercial fleet, HAL had said in an exchange filing.

Meanwhile, in its FY23 Annual Report, HAL said that under the Atmanirbhar Bharat initiative, the Government is facilitating the development of the Indian defenceindustry to reduce the import as well as dependence on the foreign OEMs.

"Various initiatives of the GoI in recent days have given thrust on the indigenisation and indigenous procurement of defence equipment. Over the next 5 -10 years, such reforms will equally help defence PSUs and private industry to put a firm step towards achieving a self-sustaining Defence industry in the country," it said.

In the near future, the Indian defence market will continue to be prime revenue source for HAL due to projects like LCA Mk1A, LCH, LUH and HTT-40. The company has taken various initiatives to make systems more agile, effective, cost efficient and to be competitive. Enhancement of HAL capability is being planned to cater above projects. New production lines are being installed for HTT-40 and LCA Mk1A Production, the company said.