HAL Shares Surge on Landmark ₹62,000 Crore Tejas Fighter Jet Deal

Hindustan Aeronautics Ltd (HAL) captured the market’s attention today as the Indian government greenlit one of the largest indigenous defence deals in history, sending the company’s stock surging.

In a major boost to India’s self-reliance in defence, the Cabinet Committee on Security (CCS), chaired by Prime Minister Narendra Modi, gave its final approval for the procurement of 97 additional Light Combat Aircraft (LCA) Tejas Mk1A fighter jets. This massive order, valued at approximately ₹62,000 crore, is a landmark achievement for the state-owned aerospace and defence giant.

Market Reacts with Enthusiasm

Investors cheered the news enthusiastically. On a day when the broader market was trading cautiously, HAL’s stock stood out as a clear outperformer.

The share price of Hindustan Aeronautics Ltd surged as soon as the news hit the street. On the BSE, the stock jumped 3.56% to hit an intraday high of ₹4,611.60. Although it pared some gains, it remained a top gainer, closing the day with significant investor interest. The positive sentiment around HAL helped counter the muted broader market, which saw the BSE Sensex close up by a modest 213.45 points (0.26%) at 81,857.84 and the NSE Nifty 50 end 69.90 points (0.28%) higher at 25,050.55.

Decoding the Landmark Deal

This isn’t the first time the Tejas Mk1A has been in the spotlight. This new order follows a previous contract signed in February 2021 for 83 similar aircraft, which was valued at around ₹48,000 crore. This repeat order underscores the government’s confidence in the indigenous platform and HAL’s manufacturing capabilities.

Here’s why this deal is so significant:

• Strategic Importance: The new fleet of Tejas Mk1A jets is crucial for the Indian Air Force (IAF), as they are set to replace the aging and soon-to-be-retired MiG-21 squadrons. This modernization is vital for maintaining a robust defence posture.
• Atmanirbhar Bharat Boost: The deal is a massive win for the ‘Make in India’ and ‘Atmanirbhar Bharat’ (self-reliant India) initiatives. The LCA Mark 1A is expected to have an indigenous content of over 65%, which not only strengthens national security but also nurtures a domestic ecosystem of defence component suppliers.
• Strengthened Order Book: This ₹62,000 crore contract provides a huge boost to HAL’s already healthy order book. With this addition, the company’s order pipeline is now estimated to be around ₹2.51 lakh crore, ensuring strong revenue visibility for years to come.

What the Experts Are Saying

Market analysts and brokerage firms have largely reacted positively to the development, viewing it as a long-term positive for the company.

Krishna Doshi, a Defence Analyst at Ashika Institutional Equities, noted that the order “strengthens HAL’s growth visibility” and acts as a “strong catalyst for the broader domestic defence ecosystem.”

Similarly, brokerage firm Motilal Oswal has maintained a ‘Buy’ rating on the stock, with a target price of ₹5,800 per share. They believe that as engine supplies from GE Aerospace ramp up, aircraft deliveries will accelerate in the coming quarters.

However, some analysts remain cautiously optimistic. UBS, for instance, has kept a ‘neutral’ rating with a target of ₹4,900, acknowledging the strong order pipeline but also hinting at execution being a key factor to watch. The timely delivery of F404-IN20 engines from US-based GE Aerospace remains a critical variable that investors will be monitoring closely.

What to Watch Next

For retail investors tracking HAL, this news solidifies the company’s position as a prime beneficiary of India’s defence modernization budget. However, it’s important to keep an eye on a few key developments moving forward:

• Execution and Delivery Timelines: HAL has committed to delivering the first few aircraft from this new order within the next couple of years. Adherence to these timelines will be crucial for market confidence.
• Engine Supply Chain: Any updates regarding the F404-IN20 engines from GE Aerospace will be closely watched, as this has been a point of delay in the past.
• Future Orders: HAL is also in the pipeline for developing the more advanced LCA Mark 2 and the fifth-generation Advanced Medium Combat Aircraft (AMCA). Any progress on these fronts could be the next big trigger for the stock.
• Technical Levels: Analysts suggest that the stock has strong support around the ₹4,320 level, with a potential short-term target range of ₹4,800 – ₹5,000.

This landmark deal is more than just a big number; it’s a testament to India’s growing prowess in defence manufacturing and a significant tailwind for HAL and its investors.

This article is for informational purposes only and does not constitute investment advice. Please conduct your own research before investing.