Synopsis: CLSA highlights a US$33 billion order opportunity for HAL over FY25–30, supported by strong backlog growth and long-term revenue visibility. Despite recent corrections, the brokerage maintains an ‘Outperform’ rating with 38% upside. Robust Q3 earnings and multiple execution catalysts strengthen the medium-term outlook.
Hindustan Aeronautics Ltd remains in focus after CLSA reiterated its positive stance, citing a massive US$33 billion order pipeline over FY25–30. Despite being excluded from AMCA 1.0 development, repeat helicopter orders and upgrade programmes are expected to offset concerns. Strong backlog growth and improving earnings continue to support the investment case.
With a market cap of Rs 2.65 lakh crore, the shares of Hindustan Aeronautics Ltd are trading at Rs 3,967 and are trading at a PE of 30 compared to its industry PE of 56.5. The shares have given a return of more than 600% in the last 5 years.
Strong Order Pipeline & Revenue Visibility
Hindustan Aeronautics Ltd shares opened in an elevated manner, thus ending a two-day losing streak, although the stock is still down 9% over the last month and close to 23% from its recent 52-week high. CLSA has reaffirmed its ‘Outperform’ call with a price target of Rs 5,436, which indicates a potential upside of 38% from current levels.
The broking house sees a gigantic order pipeline of US$33 billion in FY25-30, even after being left out of the development of India’s fifth-generation AMCA 1.0 programme. CLSA is of the view that the company’s repeat business in helicopters and the recently approved Super Sukhoi upgrade programme will easily mitigate this negative factor.
The order book of HAL has grown a staggering 88% over the last year in FY25 and is expected to touch US$28 billion in FY27. Additionally, an approved US$3.6 billion helicopter order has further improved execution visibility, with revenues expected to start flowing as early as FY27. CLSA draws attention to the fact that HAL currently enjoys almost 14 years of revenue visibility, which is the best in the entire defence space.
Key Catalysts & Valuation Comfort
Going forward, CLSA has picked out several catalysts, which include the start of Mk1A fighter jet deliveries in Q2 2026, greater clarity on GE engine supply arrangements, and developments on the GE 414 Make-in-India production agreement.
Notwithstanding its dominant market position and robust order book, CLSA is of the view that HAL is the cheapest pure-play defence stock in the sector. Overall analyst consensus is also positive, with 21 out of 25 analysts recommending a ‘Buy’ rating. While near-term execution is a key monitorable; the medium-term outlook is viewed as structurally strong, especially as the second half of FY27 approaches.
Financials
The revenue from operations for the company stood at Rs 7,699 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 6,957 crores, up by about 11 per cent YoY. Similarly, the net profit stood at Rs 1,867 crore in Q3 FY26, up compared to the Rs 1,440 crore profit in Q3 FY25.
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