HAL share price tumbles 8% as firm likely misses AMCA fighter jet shortlist

HAL share price fell over 8% after reports said the PSU was not shortlisted for the AMCA fighter jet programme. Here's why the stock declined

HAL share price today

Hindustan Aeronautics (HAL) share price fell over 8 per cent on the BSE on Wednesday after reports suggested the state-owned defence company has not been shortlisted to develop and manufacture next generation fighter jets under the Advanced Multirole Combat Aircraft (AMCA) programme. 

At 9:36 AM, HAL shares were trading 5.8 per cent lower at ₹4,210.7 per share, as against a 6-point (0.01 per cent) dip in the BSE Sensex index. 

The stock declined 8.3 per cent in the morning deals to hit a low of ₹4,100 per share. Around 0.16 million shares have, so far, changed hands on the counter on the BSE as against a two-week average volume of 0.15 million shares. 

 

Combined with the volume on the National Stock Exchange (NSE), HAL stock has seen a trade of approximately 1.75 million shares till the time of writing this report.  READ LATEST STOCK MARKET UPDATES TODAY LIVE

Why did HAL shares fall today?

HAL share price came under selling pressure on Wednesday, February 4, after a report claimed that Centre has shortlisted three private defence companies to develop and manufacture next generation fighter jets under the Advanced Multirole Combat Aircraft (AMCA) programme. 

HAL, which is the largest state-owned defence company, has not been shortlisted. 

As per a report by Business Standard, the government shortlisted the bidders based on their technical expertise, manufacturing capabilities, order book, and financial strength. 

The bidders were required to prove that they have the technical capability to absorb the AMCA design and possess adequate experience in development, engineering, manufacturing, equipping and testing, among other things,” the report said. 

A large outstanding order book – which implies delay in order execution – also guided the selection process. 

Notably, HAL has an outstanding order book of ₹2.52 trillion. One of the criteria in the AMCA EoI likely said that companies would not be considered for the manufacturing of the fighter jets if their order book was three times their turnover. 

HAL's order book is over eight times its FY25 turnover of ₹30,105 crore. 

With this, HAL is out of the race for India's biggest-ever military research and development programme.  ALSO READ | Tech stocks sink as Anthropic AI triggers global selloff; Nifty IT slids 6%

Who are the shortlisted players for fighter jets under AMCA programme?

As per reports,  Tata Advanced Systems Limited, Larsen & Toubro, and Bharat Forge have emerged as the shortlisted players for the development of next generation fighter jets under the ACMA programme. 

The selected bidder is said to collaborate with the Aeronautical Development Agency (ADA) to produce five prototypes of AMCA. The Defence Ministry has earmarked roughly ₹15,000 crore for the prototype stage. 

The final order, however, is expected to be in several multiples of that, once the aircraft is proven and ordered by the Air Force, as per reports. 

Separately, the fifth-generation fighter aircraft is expected to form the backbone of India’s air combat fleet from the mid-2030s onward. Following its development, the armed forces are likely to place an initial order of around 120 jets, with induction projected to begin around 2035. The fleet size is anticipated to expand substantially over time as newer and more capable variants enter production. 

On the bourses, L&T share price gained 1.7 per cent intraday, while Bharat Forge share price added 2.4 per cent. 

HAL share price target

According to analysts, Hindustan Aeronautics Ltd (HAL) share price trades at an attractive 1-year forward price-to-earnings (P/E) ratio of ~28x, relative to other major defense manufacturers. The company's substantial order backlog of over ₹2 trillion provides strong revenue visibility, complemented by growing MRO (Maintenance, Repair & Overhaul) opportunities. 

 

"However, ongoing delays in F-404 engine deliveries remain a near-term headwind. Given the valuation moderation and strong long-term fundamentals, investors with a 3-5 year horizon may consider building positions gradually," said Anil R, research analyst at Geojit Investments.