HAL gains on robust Q3 results, CLSA sees 13% upside

Analysts at CLSA shared an “outperform” call on the stock following Q3 results, with a target price of Rs 3,225 a share, an upside of 13 percent from last close

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Hindustan Aeronautics (HAL) shares gained 2 percent on February 13 morning after the company reported strong third-quarter (Q3FY24) financials.

Analysts at CLSA shared an “outperform” call after the result announcement, with a target price of Rs 3,225 a share, implying an upside of 13 percent from the last close.

The defence company stock has surged over 37 percent in the past three months against an 8 percent rise in the benchmark Sensex. The share hit a 52-week high of Rs 3,130 on February 8.

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HAL’s standalone net profit rose 8.6 percent on-year to Rs 1,253 crore in the December quarter, while revenue climbed 7 percent YoY to Rs 6,061 crore.

The company’s earnings before interest, tax, depreciation, tax and ammortisation (EBITDA) jumped 45.5 percent to Rs 1,434 crore.

Analysts at CLSA said that HAL’s PAT growth was supported by a 44 percent rise in treasury income and backlog remained flat on a yearly basis.

“The key message from Q3 was the wait for its biggest engine order of $3.6 billion. The company’s cash pile has swelled to $2.6 billion, rising 27 percent YoY along with lower depreciation charges,” the brokerage firm said in the note.

ALSO READ: PTC Industries, HAL sign MoU to make raw material, components for aircraft, choppers

The board declared its first interim dividend of Rs 22 a share for fiscal year 2023-24. The record date for the payment will be February 20.

In the December quarter, foreign institutional investors (FIIs) upped stake in HAL to 12.9 percent from Rs 12.6 percent in the previous quarter. Mutual funds, however, trimmed their stake to 6.6 percent from 7.2 percent.

Valuation-wise, HAL shares trade at 30.9x price-to-earnings (PE) ratio, lower than its sector PE ratio of 102.9x, suggested data.

At 9.49 am, the stock was trading at Rs 2,853.75 on NSE, up 0.27 percent from the previous close.

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