Hindustan Aeronautics Ltd (HAL) is set for a major growth phase as a key supply bottleneck in GE-F404 engine deliveries for the Tejas Mk-1A fighter jets has been resolved. With engine shipments starting from April 2025, HAL expects to deliver 10-11 Tejas aircraft in FY26, generating ₹3,000-3,500 crore in revenue, according to a note by Elara Capital.

This will enable HAL to meet its commitment of delivering 83 Tejas Mk-1A jets by FY29, with production ramping up to 24 aircraft per year. The Bengaluru facility will produce 16 aircraft, while the Nashik plant will contribute eight jets annually.

GE Aerospace Begins F404 Engine Deliveries

On March 26, GE Aerospace confirmed that it has begun delivering the F404-IN20 engines to HAL. The company has provided the first batch of 99 engines, a critical step in accelerating Tejas Mk-1A production and helping HAL fulfill its defence commitments.

HAL’s Financial Growth and Stock Outlook

HAL has shown impressive financial performance, with:

• Revenue growing at a CAGR of 8.7% over the last five years.

• Profit surging at 26.7% CAGR, reflecting strong operational efficiency.

• Strong order book visibility with large upcoming defence contracts.

Elara Capital remains bullish on HAL, maintaining a target price of ₹5,160, which indicates a 25% upside from the current market price of ₹4,135.70.

HAL’s Expanding Order Pipeline

HAL has set an ambitious target of achieving an order book of ₹2.5-2.6 lakh crore by FY26, up from ₹1.3 lakh crore in December 2024. This will be driven by:
✅ Two major defence contracts worth ₹1.3 lakh crore, expected within the next 3-6 months, for 97 additional Tejas Mk-1A jets and 156 LCH Prachand helicopters.
✅ ₹35,000 crore expected for Su-30MKI upgrades, Indian Multi-Role Helicopter (IMRH) development, and Repair & Overhaul (ROH) contracts.

HAL’s long-term order pipeline could exceed $60 billion (₹5 lakh crore) over the next decade, driven by:

• Engine upgrades for existing aircraft.

• New fighter jet and helicopter orders.

• Rising export potential for HAL-made aircraft.

Investor Confidence and Market Performance

HAL stock closed at ₹4,127.90, gaining 2.91% on the BSE, reflecting strong investor sentiment. Analysts highlight that HAL’s earnings CAGR of 14% for FY24-27E and a projected ROE of 23% for FY25-27E make it a top-performing defence sector stock.

With India expanding its military fleet and modernizing its defence infrastructure, HAL is well-positioned for sustained growth.

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