Defence PSU Stock Crash: Why HAL Shares Fell 12%? Morgan Stanley Cuts Target By 34%; Q3, Dividend Ahead

Hindustan Aeronautics (HAL), the largest defence stock of India in terms of market share, extended its sharp selling pressure on February 5, as well. On Thursday, HAL dropped by as much as 6.3% after ended lower by 6% in the previous session.

The reason behind bearish tone in HAL is after reports stated that the defence giant was not shortlisted under the AMCA programme which is to develop next-gen fighter jets. Following this, global brokerage Morgan Stanley has trimmed its target price on HAL by a steep 34%, which also added to its woes.

HAL Share Price:

At the time of writing, HAL traded at Rs 3996.90 apiece on BSE, down by 220.05 or 5.22% with market cap of Rs 2,67,302.68 crore. The stock has plunged by nearly 6.3% to hit an intraday low of Rs 3952 apiece just few minutes ago. The stock is nearing its 52-week low of Rs 3,045.95 apiece.

HAL was down by 5.6% yesterday. From February 4th to 5th, the heavyweight has nosedived by nearly 12%.

Why HAL Share Price Crashed?

Earlier, an Economic Times report said that three private companies have been shortlisted for developing and manufacturing next-generation fighter aircraft under the Advanced Multirole Combat Aircraft (AMCA) programme. These companies were reported to be Tata Advanced Systems, L&T and Bharat Forge. The report also said that HAL has been ruled out.

This led to selling pressure in HAL stocks. Although, in its regulatory filing, HAL clarified over the buzz.

HAL said, "Various media reports regarding the Advanced Medium Combat Aircraft (AMCA) programme have come to HAL's attention. HAL has not received any official communication in this regard and, therefore, is not in a position to comment on these reports at this stage. HAL is committed to keeping
all stakeholders fully informed of all developments."

"HAL would like to reiterate that it has a robust confirmed order book, providing strong revenue visibility, and a healthy production and execution pipeline extending up to 2032," the defence PSU said.

The company also pointed out that they are simultaneously advancing multiple strategic programmes, including the Indian Multi Role Helicopter (IMRH), LCA Mk2, and Combat Air Teaming System (CATS), which will further strengthen its technological capabilities and long-term growth prospects. These programmes are expected to enter production post-2032.

Additionally, HAL emphasized that they have diversified their portfolio in the civil aviation segment with platforms such as Dhruv NG, Hindustan 228 and SJ 100, which will enhance revenue and provide sustainable growth in the future.

Hence, HAL believes they have a strong fundamentals and is committed to delivering sustained year on year growth through consistent performance.

HAL Share Price Target Cut:

Another key reason to current selling pressure is downgrade in rating and target price. Morgan Stanley has trimmed its outlook on HAL to "under-weight" from previous rating of "equal-weight". The broker also reduced its target price by a steep 34% to Rs 3,355 from earlier target of Rs 5,092.

In Stanley's view, HAL's shares have downside risk ahead owing to surge in competition from private players. And if slower executive persists because of high import dependance and increase in defence spend from other countries, that could be a risk factor for HAL.

HAL Q3 Results Date & Upcoming Dividend:

HAL will present its Q3 results for FY26 on February 12, 2026. The company has also mentioned its plan to declare first interim dividend for FY26.

In the previous fiscal, HAL paid dividends up to Rs 40 per share, which was higher than dividend payout of Rs 35 per share in FY24. These came after HAL split its share in the ratio of 1:2 in September 2023.

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