HAL share price: 3 key reasons why Jefferies expects 23% upside for this Defence stock

Defence Stock: HAL share price has risen around 16% in last one month with the India Pakistan News flow bringing focus on Defence stocks . Here 3 key reasons why Jefferies expects another 29% upside for the stock

3 Key reasons why Jefferies expects more upside

For three to five years, double-digit revenue growth for Hindustan Aeronautics Ltd should be driven by high margin service income and aircraft deliveries, expects Jefferies India Pvt Ltd. . FY26 sales projection of 8–10% seems modest. PM Modi's praise of Made in India equipment amid recent tensions between India and Pakistan suggests a greater emphasis on indigenous production and purchased which is positive for HAL. Jefferies has given a BUY ratings with a target price of ₹6475 for HAL share price which currently is trading around ₹5000 levels. This indicates about 23% upside for HAL share price.

1. Strong Order book and pipeline- The revenue visibility for FY26-FY30 period is provided by the Rs1.89 trillion (1,89,000 crore) order book which is 6.1 times FY25 revenues) and the Rs2.5 trillion pipeline: In FY25, Hindustan Aeronautics (HAL) recorded a 3 times year on year increase in order flow of Rs1.2 trillion, of which Rs1 trillion was made up of manufacturing orders and the remaining was mostly made up of repairs and maintenance. Rs650 bn Tejas Mark 1A and Rs340 bn Advanced Light Helicopter orders have near-term ordering visibility. Rs600 bn Sukhoi-30 upgrade orders are expected over 3-5 years as per Jefferies

• Strong Medium term outlook for revenues and margins- Management in FY24 mentioned that service revenue should rise 8-9% CAGR (compound annual growth rate) and manufacturing revenues should rise 15-18% in the medium term. Also Deliveries of GE engines should cause manufacturing revenues to increase starting in FY26 estimated as per Jefferies

• EPS upgrades for FY26 and FY27- Jefferies has Increases Earnings Per share estimates for FY26 and FY27 by 3%. The global defense theme enhances the benefits of order book exposure.

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