HAL stock takes flight on robust order book, indigenisation focus

The over Rs 47,000 cr light combat aircraft order has boosted growth prospects, while valuation remains reasonable

Shares of Hindustan Aeronautics (HAL), the state-owned aerospace and defence equipment company, jumped close to 14 per cent intra-day on Thursday, after the Union Cabinet approved procuring its 83 light combat aircraft (LCA) — Tejas — for the Indian Air Force (IAF). While this enhances long-term growth prospects, the government’s intention to reduce imports of defence equipment could translate into more orders for HAL. 

Reasonable valuations, healthy returns on equity, and consistent dividend payouts are other positives.

The Cabinet Committee on Security (CCS) on Wednesday approved procuring 73 LCA Tejas Mk-1A fighter aircraft and 10 LCA Tejas Mk-1 Trainer aircraft at Rs