Hindustan Aeronautics has been in focus. The delivery delays have led to lower revenue estimates. As a result of that, international brokerage firm Nomura cut the target price slightly to Rs 5,954 from Rs 6,000. However, the new target price still implies over 62% upside from the current levels. The brokerage maintained its ‘Buy’ rating on the key defence sector stock.
FY26 revenue miss due to delivery delays
HAL’s provisional revenue for FY26 was Rs 32,250 crore, which was 7% lower than Nomura’s estimates. This miss was primarily because no LCA Mk1A aircraft were delivered during the fiscal year due to supply chain disruptions.
“Given the supply chain issues, we now factor in the delivery of 10 LCA aircraft in FY27 (vs 14 earlier) while our FY28 estimates remain unchanged. In 9M FY26, HAL’s revenue and EBITDA stood at Rs 19,150 crore/Rs 5,050 crore,” said Nomura.
Supply chain bottlenecks with GE engines
The timely delivery of future LCA aircraft is heavily dependent on GE supplying engines. While five aircraft are currently integrated and ready for handover, another 28 airframes are in various stages of assembly or testing, all awaiting engines from GE.
Robust order book and growth visibility
Despite the revenue miss, HAL maintains a strong order book of Rs 2.54 lakh crore, reflecting a 34% year-over-year increase. This provides a high book-to-bill ratio of 8x, offering long-term visibility for execution and growth.
Positive earnings outlook
Nomura forecasted a 26% Profit After Tax (PAT) CAGR over the FY26–28 period. This growth is bolstered by significant new orders, such as the Rs 62,400 crore contract for 97 LCA Mk1A aircraft.
HAL share price performance
The share price of HAL has risen 4% in the last five trading sessions. However, the stock has declined 5.8% over the last one month and 22.3% in the past six months. HAL’s stock price has dropped 6.22% over the last 12 months.
HAL Q3FY26
The company reported a consolidated net profit of Rs 1,867 crore in Q3FY26, a jump of 30% year-over-year. Its revenue from operations rose 11% YoY to Rs 7,699 crore in the third quarter of the current financial year, compared with Rs 6,957 crore in the same quarter last year.
The company reported EBITDA of Rs 1,871 crore in the third quarter, up from Rs 1,682 crore in the year-ago period. Margins improved marginally to 24.3% from 24.18% a year earlier.
Total expenses during the quarter rose to Rs 6,139 crore from Rs 5,552 crore a year ago, largely in line with revenue growth.
All in all, Nomura argued that the risk-reward is favourable as the stock trades at 18.5x for FY28 earnings, which is well below its five-year average one-year forward P/E of 26x.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
