Synopsis: The brokerages highlighted this defence stock on its strong order visibility, healthy balance sheet, and upcoming Tejas and helicopter delivery pipeline as key long-term growth drivers.
The article outlines why brokerages remain bullish on Hindustan Aeronautics Limited despite near-term execution concerns, supported by its record order backlog, strong cash generation, improving defence manufacturing opportunities, and a healthy pipeline of future defence contracts expected over the next few years.
With the market capitalization of Rs 2,93,338 crore, Hindustan Aeronautics Ltd’s shares closed at Rs 4,386 per share, down 4.81 percent from its previous close. The share of the company has returned 790 perent over the last five years.
Brokerage View
Nomura on HAL
Nomura maintained its ‘Buy’ rating on the stock with a target price of Rs 5,954, implying an upside potential of around 35.7 percent from today’s close, backed by strong operating performance, robust cash generation, and a healthy long-term order backlog.
Strong Q4 Performance Hindustan Aeronautics Limited delivered a strong Q4 FY26 performance, with adjusted EBITDA surpassing Nomura’s estimates by 19 percent and consensus estimates by 7 percent. The brokerage noted that better execution, stable margins, and healthy operational momentum supported the earnings beat during the quarter.
Robust Order Book and Cash Flow HAL’s order backlog stood at Rs 2.54 trillion (254,000) as of March 2026, nearly 8 times trailing twelve-month sales, providing strong long-term revenue visibility. The company also maintained healthy cash generation, with FY26 operating cash flow at Rs 109.2 billion, equivalent to 1.1 times EBITDA, reflecting strong business fundamentals.
Efficient Working Capital and Valuation Comfort Nomura highlighted that HAL’s working capital efficiency improved, with net working capital days at negative 208 in FY26 compared to negative 192 in FY25, aided by higher customer advances. Cash and cash equivalents increased 21 percent YoY to Rs 462 billion, while the stock trades at 23 times FY28 estimated EPS, below its historical average valuation.
GS on Hindustan Aeronautics
Goldman Sachs maintained its ‘Neutral’ rating on the stock and marginally reduced the target price to Rs 5,225 from Rs 5,255, citing strong order visibility but slower execution pace, margin pressure from higher expenses, and delays in Tejas Mk-1A deliveries.
Strong Order Book Supports Long-Term Growth Hindustan Aeronautics Limited continues to benefit from a robust order backlog, which Goldman Sachs believes provides healthy long-term revenue visibility. The brokerage noted that the strong pipeline of defence orders and government-led indigenisation initiatives remain supportive for HAL’s long-term growth outlook despite near-term execution challenges.
Execution Pace and Margin Pressure Remain Concerns Goldman Sachs highlighted that execution momentum is yet to improve materially, which could limit near-term earnings growth. The brokerage also pointed out that EBITDA margins came under pressure during the quarter due to higher expenses, indicating that cost inflation and execution delays may continue to impact profitability in the near term.
Tejas Mk-1A Deliveries Key Monitorable: The brokerage believes deliveries of the Tejas Mk-1A aircraft remain a major trigger for the stock going forward. Timely execution and faster deliveries are expected to improve revenue growth, operational efficiency, and investor confidence, making the programme one of the key monitorables for HAL in the coming quarters.
Q4 Update
Strong Growth in Order Book as of Q4 Hindustan Aeronautics Limited reported a sharp rise in its order book to Rs 1,89,300 crore from Rs 94,127 crore as of April 1, 2024, even after executing turnover worth Rs 30,105 crore during the year.
The increase was mainly driven by major manufacturing contracts, including 240 AL-31FP engines for Sukhoi-30 aircraft worth Rs 25,500 crore, 156 LCH Prachand helicopters worth Rs 62,777 crore, and 12 Sukhoi-30MKI aircraft worth Rs 13,454 crore, along with multiple upgrade programmes.
Healthy Pipeline Supports Future Visibility The company also secured repair and overhaul orders worth Rs 19,271 crore, design and development orders worth Rs 3,180 crore, and export orders worth Rs 493 crore during the period.
HAL stated that its future order pipeline remains strong, with expected contracts for 97 LCA Mark 1A aircraft, 143 ALH helicopters, Dornier aircraft supply, and upgrade programmes currently under various stages of approval. The total pipeline opportunity is estimated at nearly Rs 1 lakh crore and is expected to materialise over the next one to two years.
About the Company
Hindustan Aeronautics Limited is India’s leading aerospace and defence company engaged in the design, development, manufacturing, repair, and maintenance of aircraft, helicopters, engines, and defence systems. The company plays a key role in India’s defence indigenisation programme and supplies products primarily to the Indian armed forces.
Financial Highlights: The revenue from operations grew by 2 percent to Rs 13,942 crore in Q4 FY26 (Mar 2026) from Rs 13,700 crore in Q4 FY25 (Mar 2025), and EBIDT decreased by 4 percent to Rs 5,059 crore in Q4 FY26 from Rs 5,295 crore in Q4 FY25. Accompanied by a net profit growth of 6 percent to Rs 4,196 crore in Q4 FY26 from Rs 3,977 crore in Q4 FY25, resulting in an EPS growth of 6 percent to Rs 62.74 per share in Q4 FY26.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Defence Stock to Buy Now for an Upside of 36%; Do You Own It? appeared first on Trade Brains.