HAL in a sweet spot on growing demand for fighter jets by Indian defence forces

Bengaluru, 13 November Hindustan Aeronautics Ltd (HAL) is in a sweet spot with huge growth opportunity as the demand for major fighter jets for Indian defence forces is likely to grow manifold in coming years.

Currently, India has a strength of 31 fighter jet squadrons, which falls short of the sanctioned total of 42. This will be further exacerbated by the phasing out of aging aircraft such as Mig-21, Mig-29, Jaguar, and Mirage.

“With HAL’s monopoly-like position in India’s defence aerospace sector coupled with the government’s push to procure indigenously designed & developed defence aircraft, the company is in a sweet spot to benefit from a long-term demand opportunity,” Brokerage firm Prabhudas Lilladher in a report said.

Currently, HAL is involved in several major fighter aircraft projects that include Tejas Mk2, AMCA (Advanced Medium Combat Aircraft), TEDBF (Twin Engine Deck Based Fighter) among others. It is also involved in helicopter projects such as LUH (Light Utility Helicopter), LCH (Light Combat Helicopter), IMRH (Indian Multi Role Helicopter), which will replace various outgoing fleets.

The brokerage firm expects HAL’s manufacturing revenue to accelerate from FY25 onwards.

“HAL is a long-term play on the growing strength & modernisation of India’s air defence given its position as the primary supplier of India’s military aircraft. Long-term sustainable demand opportunity, owing to the government’s push on procurement of indigenous defence aircraft, and leap in HAL’s technological capabilities due to development of more advanced platforms put it in a good stead,” the brokerage firm added.

For the second quarter ended September, the net profit of HAL was at Rs 1,236.67 crore as compared to Rs 1,221 crore in the same quarter last year.

Revenue from operations at the defence major came in at Rs 5,635.7 crore in the September quarter as compared to Rs 5,144.7 crore in the same quarter last year.

During the quarter, operating margin contracted by 4.41 per cent year-on-year basis to 27.1 per cent, led by a sharp decline in gross margin.