Buy Hindustan Aeronautics For A Target Price Of 2860, Potential Gain 25%: ICICI Direct

Leading brokerage house ICICI Direct has given buy rating to the stock of Hindustan Aeronautics for a target price of Rs 2860 apiece with a potential gain of 25%. The company has delivered revenue, EBITDA and PAT CAGR of 7.4%, 12% and 26.5%, respectively, in FY18-22.

In FY22, repair & overhaul contributed approximately 64% to total revenues while manufacturing contributed approximately 30%.

Hindustan Aeronautics Ltd Stock Outlook

The current market price of the stock is Rs 2315 apiece with a gain of 0.90% intraday. The stock's 52-week high is Rs 2349 apiece and 52-week low is Rs 1181 apiece, respectively. According to ICICI Direct, if investors buy the stock at its current market price, it has the potential to reach to Rs 2860 apiece with a potential gain of 25% in 12 months target period.

Hindustan Aeronautics Ltd Return

The stock has given a return of 256% in 3 years, 104% in 5 years, 71% in 1 year, and 22% in 3 months.

Hindustan Aeronautics Market Capitalization

The market capitalization of the company is Rs 77,410.71 crore.

Hindustan Aeronautics Key Orders

Key orders in the pipeline for the next one to two years include 70 HTT-40, 25 advanced light helicopters (ALH) for Army, six Dornier aircraft, 12 light utility helicopters (LUH), 12 Sukhoi-30 MKI and 240 AL-31 engines for Sukhoi-30 MKI aircraft. In the longer term (three to five years), key orders in the pipeline are 145 LCH, 175 LUH, 60 Marine ALH, 36 HTT-40, 18 RD-33 engines for MiG-29 and medium weight fighter (Tejas MK2).

Key Triggers For Future Price Performance

Healthy order book position (Rs 84800 crore; ~3.2x TTM revenues) led by large scale orders in manufacturing aircraft/helicopters (LCA, LCH and ALH). Continuous order inflow in maintenance, repair & overhaul (MRO) with strong order pipeline of ~Rs 1.2 lakh crore in manufacturing in next three to four years (led by LUH, LCH, ALH, Dornier, HTT-40, engines for Su-30, MiG-29).

LCA Tejas MK1A, largest order in manufacturing, deliveries to IAF expected from FY25E. Moreover, execution of other key orders and sustained growth in MRO will drive revenue growth in double digits from FY25E.

Hindustan Aeronautics Valuation

According to ICICI Direct, "We expect HAL to deliver revenue and EBITDA CAGR of 7.7% and 14.1%, respectively, in FY22-24E. PAT likely to grow at ~10% CAGR (FY21-24E). Increase in profitability with strong asset turnover will result in healthy return ratios over FY23-24E. We continue to remain positive and retain our BUY rating on the stock."

Hindustan Aeronautics About

Hindustan Aeronautics (HAL), the largest defence PSU in India, is engaged in design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.