HAL share price snaps 4-day winning streak; time to book profit?

HAL share price declined over 2 per cent on the BSE on Monday, May 19, snapping its four-day winning streak. HAL share price opened at ₹5,158.95 against its previous close of ₹5,126.95 and dropped 3 per cent to an intraday low of ₹4,972.10. Finally, the defence stock settled 2.16 per cent down at ₹5,016.40. Equity benchmark Sensex closed 0.33 per cent lower at 82,059 at that time.

HAL share price has seen significant gains in the recent past. Over the last four days, the defence stock jumped 15.5 per cent, while this year till date, it has gained 20 per cent.

HAL share price hit a 52-week low of ₹3,045.95 on March 3 this year and has been witnessing healthy buying interest since then. On a monthly scale, the stock jumped 35 per cent in March, followed by a 7 per cent gain in April. In May so far, the stock has gained 12 per cent.

The stock hit a 52-week high of ₹5,675 on July 9 last year.

HAL Q4 results

Hindustan Aeronautics (HAL) is one of the largest and most renowned aircraft manufacturing companies in India. On May 14, HAL said its standalone profit declined nearly 8 per cent YoY to ₹3,958.25 crore in Q4FY25 from ₹4,292.04 crore in Q4FY24, while revenue dropped 7 per cent to ₹13,699.87 crore versus ₹14,768.78 crore.

EBITDA declined 10 per cent YoY to ₹5,292 crore, while EBITDA margin came at 38.6 per cent compared to 40 per cent YoY.

However, despite reporting a fall in profit, revenue, EBITDA and EBITDA margin, the company's shares saw healthy gains after the Q4 results due to improved sentiment about the defence sector.

The stock rose 3.47 per cent on May 14, 2 per cent on May 15 and 5.40 per cent on May 16.

Is it time to book profits in HAL stock?

Top brokerage firms largely appear positive about the stock for the long term. However, some of them highlight the recent sharp rally in the stock, hinting this may not be an ideal time to initiate fresh longs in the stock.

Motilal Oswal Financial Services maintained a buy call on the stock with a target price of ₹5,650. It said HAL reported a better-than-expected FY25 performance, driven by improved margins due to lower provisions.

"We revise our estimates upwards by 12 per cent and 4 per cent and roll forward our target price to ₹5,650 based on the average of DCF and 32 times Jun’27E earnings," Motilal said.

"We are still constructive on the overall defence space, but the recent rally has been too sharp. While we reiterate our buy rating, we would wait for better entry points as we acknowledge that risk-reward is not favourable at this point," said the brokerage firm.

Choice Equity Broking changed its recommendation on the stock to an "add" from a "buy" earlier and revised its target price to ₹5,570 from ₹5,000.

"We revise our FY26E and FY27E revenue growth estimates downward by 12.8 per cent and 13.9 per cent, respectively, and now project HAL’s revenue, EBITDA, and PAT to grow at a CAGR of 7.5 per cent, 9 per cent, and 11.7 per cent, respectively, over FY24-27E," said Choice Broking.

"However, given the improving execution visibility and strong project pipeline, we assign an 'add' rating and revise our target price to INR 5,570. We also raise our valuation PE multiples from 32 times to 35 times FY27E EPS, reflecting confidence in HAL’s long-term strategic positioning and the visibility offered by its upcoming programs," the brokerage firm said.

Brokerage firm Elara Securities has also downgraded the stock to 'accumulate' from 'buy', as it has outperformed the Nifty by 44 per cent in the past three months.

Elara raised its FY26E and FY27E EPS estimates by 6 per cent and 5 per cent, respectively, due to increased clarity regarding the delivery of Tejas Mk 1A and the sustained high EBITDA margin.

"We raise our target price to ₹5,640 from ₹5,160 on 40 times March FY27E P/E due to robust order pipeline providing revenue visibility, as well as given the expected positive surprise from unexplored export orders. But we revise HAL to accumulate from buy as it has outperformed the Nifty by 44 per cent in the past three months. Expect an earnings CAGR of 7 per cent in FY25-28E with 22 per cent ROE in FY27E-28E," said Elara.

Technical experts also remain positive about the stock and believe the dips in the stock prices should be seen as buying opportunities.

"The technical setup is positive, and any profit-booking in the stock will be an opportunity to buy," said Kunal Kamble, Senior Technical Research Analyst at Bonanza.

Kamble pointed out that the stock has recently given a breakout of its previous resistance, from where it had slipped and formed a new low.

A weekly close above it indicates that buyers expect the stock to move higher, Kamble said.

The stock is well-placed above its major EMA which indicates bulls control. The RSI is moving in the northern direction supporting the price action. The DI+ trading above DI- indicates uptrend well ADX trading above DI- indicates strength in the up move, said Kamble.

According to Shitij Gandhi, Senior Research Analyst (Technicals) at SMC Global Securities, HAL has broken out above an inverted head and shoulders pattern on the daily charts, signalling a bullish reversal.

Gandhi said on the upside, the ₹5,150 level is expected to act as an immediate resistance. A sustained move above ₹5,200 could reignite bullish momentum, paving the way for further upside.

On the downside, the ₹4,800-4,700 zone is likely to provide strong support. The overall bias remains bullish as long as the stock holds above the ₹4,500 mark, Gandhi said.

"Traders are advised to ride the ongoing momentum with a trailing stop loss or consider initiating fresh long positions on dips, provided key support levels remain intact. Maintaining disciplined risk management is essential to capitalise on the prevailing uptrend," said Gandhi.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.