In recent developments, Hindustan Aeronautics Limited (HAL) faced scrutiny from the Indian Air Force (IAF) after delays in delivering key aircraft. The IAF Chief expressed concerns about HAL’s performance, which prompted the company to clarify that delays were partly due to GE Aerospace not supplying engines for the Tejas light combat aircraft. However, a positive turn of events emerged with GE Aerospace delivering the first of 99 engines, boosting HAL’s execution capabilities.

ICICI Securities Upgrades HAL Stock to ‘Buy’

In light of these developments, ICICI Securities has upgraded HAL’s stock rating from ‘Hold’ to ‘Buy’. Additionally, they revised the target price upward by 23%, increasing it from ₹4,065 to ₹5,000. According to ICICI Securities, this engine delivery is a critical step that reduces execution risk concerns for investors, enhancing confidence in HAL’s future.

• Upgrade Details:
  • Rating: Buy
  • Previous Rating: Hold
  • New Target Price: ₹5,000 (up from ₹4,065)

New Orders Boosting HAL’s Order Book

HAL recently secured substantial new orders, including 97 Tejas Mk 1A aircraft and 156 LCH Prachand helicopters, significantly bolstering its order book. ICICI Securities anticipates a robust revenue growth of 25-28% through FY27, with the order book projected to surpass ₹1.3 lakh crore. This growth trajectory may lead to an impressive 39% compounded annual growth rate in earnings per share by FY27, compared to FY25.

Production Plans and Future Projections

Currently, HAL is capable of producing 24 Tejas Mk 1A aircraft annually. However, projections indicate a gradual increase in production capacity, expected to rise from 10 units in FY26 to 24 units by FY30. Furthermore, HAL aims to finish the assembly of its first Tejas Mk-II aircraft by October 2025, with the inaugural flight scheduled for the end of March 2026.

IAF’s Concerns About HAL’s Reliability

The tension between HAL and the IAF was underscored during Aero India 2025, where IAF Chief Air Chief Marshal A P Singh voiced his frustrations regarding HAL’s delivery delays. “You must alleviate our worries and instill confidence. Right now, I’m not confident in HAL, which is concerning,” Singh remarked, highlighting the urgent need for HAL to restore trust with the IAF.

HAL’s Stock Performance Overview

HAL’s stock has shown a notable increase of 3.77% over the last five trading days. Over the past month, it has delivered an impressive 35% return to investors. However, it has experienced a 5.5% decline in the last six months. In a year’s span, the defense stock has enhanced investor wealth by 22.8%.

These developments illustrate HAL’s critical role in India’s defense sector and highlight the importance of timely execution in meeting military needs. With new contracts and a positive outlook from analysts, HAL is positioned for growth, albeit amidst challenges in confidence from its primary customer, the IAF.