Hindustan Aeronautics
Hindustan Aeronautics
Aerospace & Defense F&OKey Fundamentals
LargecapEngineeringAerospace & DefenseTapetide Score
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Key Insights
Strengths
3- Company is almost debt free.
- Company has a good return on equity (ROE) track record: 3 Years ROE 26.0%
- Company has been maintaining a healthy dividend payout of 31.9%
Weaknesses
4- Stock is trading at 7.50 times its book value
- The company has delivered a poor sales growth of 7.78% over past five years.
- Earnings include an other income of Rs.3,897 Cr.
- Working capital days have increased from 153 days to 301 days
Growth Rate
AI Analysis — Bull vs Bear
Hindustan Aeronautics Ltd has a market capitalisation of about Rs 3,19,233 Cr and trades at a P/E of 34.3 and a P/B of 7.79. It is almost debt free and has earned a 3-year average ROE of 26%. Profit has grown 23% a year over five years while sales grew only 8%, working capital days have risen from 153 to 301, and the stock returned 1% over the last year after a 48% five-year CAGR.
- Returns on capital have held steady: ROE averaged 25% over 10 years, 27% over 5 years and 26% over 3 years, and was 24% last year.
- The company is almost debt free, so its 24% ROE is not boosted by borrowing and interest costs do not weigh on earnings.
- Profit grew faster than sales: 23% a year over 5 years versus 8% for sales. This points to margin expansion and operating leverage.
- Profit growth is still ahead of sales growth in the short term: TTM profit grew 12% versus 7% for sales, and 3-year profit CAGR is 16% versus 7% for sales.
- Dividend payout is 31.9%, which returns cash to shareholders while keeping about 68% of earnings for reinvestment.
- The stock has compounded at 36% a year over 3 years and 48% a year over 5 years, reflecting strong long-term market recognition of its earnings improvement.
- The stock returned 1% over the past year while TTM profit grew 12%. This has lowered the P/E to 34.3 from what the earlier run-up implied.
- Valuation is high at 7.79x book value and 34.3x earnings, an earnings yield of about 2.9%. That leaves little room for disappointment.
- Working capital days rose from 153 to 301, nearly doubling. More cash is tied up in receivables and inventory, which could strain cash conversion.
- Top-line growth is modest: sales CAGR is 7% over 10 years, 8% over 5 years, 7% over 3 years and 7% TTM. That is low for a stock trading at a P/E of 34.3.
- Earnings include Rs 3,897 Cr of other income. Implied trailing profit is about Rs 9,300 Cr (market cap divided by P/E), so a meaningful share of reported earnings comes from outside core operations.
- The stock's 5-year CAGR of 48% is about double the 23% profit CAGR, so much of the past return came from a higher valuation multiple. That driver may not repeat.
- Profit growth is slowing: 23% over 5 years, 16% over 3 years and 12% TTM. On 3-year growth, the P/E of 34.3 implies a PEG of about 2.1.
- ROE slipped to 24% last year from a 5-year average of 27%. If this continues, a P/B of 7.79 becomes harder to justify.
- The dividend yield is only 0.94% despite a 31.9% payout, so income offers little support to returns at the current valuation.
This is AI-generated analysis, not financial advice. Do your own due diligence.
AI News Digest
- Tejas Mk1A deliveries still zero Sep 15
No Mk1A had been delivered as of early September. The programme is more than two years behind schedule and the FY26 target was cut from 12 aircraft to 5-6. CMD Ravi Kumar said 'we are still not there yet,' with radar, weapons and software-integration issues still being fixed on 27 of 180 airframes.
- GE engine supply remains bottleneck Sep 8
GE blamed disruption at its sub-contractors and had sent only 7 F404 engines (now 10) out of 99 contracted under a ₹5,375 crore 2021 deal. That leaves about 30 airframes waiting despite capacity of 24 aircraft a year. GE has promised 20 more engines by end-2026.
- Stock slides from Sep highs Sep 30
Shares fell from ₹5,029 on Sep 9 to a previous close of ₹4,549.30 on Sep 30, about 10% lower, and lost around 2.7% over the month to Sep 21. They now sit well below the one-year high of ₹5,149.90 set on Aug 17.
- Sequential profit drop in Q1 Sep 15
Q1 FY27 profit of ₹1,581 crore was 62% below the ₹4,184 crore of the prior quarter, reflecting HAL's back-ended revenue pattern. Jefferies' bear case of ₹4,250 (10% downside) assumes slower defence ordering and margin pressure from higher indigenous content.
- Private players gaining aerospace share Sep 9
Some investors worry private firms will take share from HAL. L&T, LMW and Dynamatic now build Mk1A wings, air intakes and fuselage sections, and analysts see a ₹30,000-40,000 crore addressable market if 30-40% of the work is outsourced.
- Weak broader market, crude spike Sep 9
The Sensex fell 555.23 points to 75,577.58 and the Nifty dropped 0.61% to 23,635.10, forming lower highs. Brent rose 1.4% to $99.41 on West Asia tensions.
- GE ships 3 more F404 engines Sep 4
GE shipped 3 F404-IN20 engines in August, ahead of Goldman's estimate of 2, taking cumulative Mk1A deliveries to 10 from 7. The stock rose 2.82% to ₹4,914.85, the Nifty India Defence index gained 1.6% to 9,825.20, and Goldman kept Buy with a ₹5,870 target.
- Jefferies Buy, ₹6,800 target Sep 30
Jefferies now expects 10 Mk1A deliveries this year versus 5 earlier, with 24 airframes fitted with engines and 90-95% of radar and missile integration done. The stock rose about 3% to ₹4,695. The firm forecasts 15% revenue CAGR over FY26-30 and EBITDA margin rising from 29.6% to 32.7%, with a bull case of ₹8,000.
- ₹1.1 lakh crore ALH AON Sep 8
The DAC granted Acceptance of Necessity for 138 Advanced Light Helicopters worth ₹110,000 crore, part of $11.5 billion in approvals. CLSA says this could add around 13% to the $27 billion backlog plus about $600 million in advances. It is a pre-award step, not a signed contract.
- Triple platform handover to IAF Sep 15
HAL delivered the final 2 LCA FOC trainers, completing the 40-aircraft Mk1 order, and the first 3 HTT-40s under the 70-aircraft, ₹6,838 crore contract. It also handed 4 Dhruv NG helicopters to Pawan Hans. HTT-40 capacity has been raised to 20 aircraft a year.
- Brokerages bullish on execution Sep 21
Citi kept Buy with a ₹6,175 target, Goldman Buy at ₹5,870 and CLSA Outperform at ₹5,481, citing better delivery visibility. Shares rose 2% to ₹4,889 and were up 10.6% YTD.
- Citi calls HAL cheapest defence play Sep 9
Citi said HAL trades at about 31x FY28E P/E, below defence peers, and 24 of 30 analysts rate it Buy. The stock closed 3.56% higher at ₹5,029 after a breakout from 12 sessions of consolidation.
- Massive order book, strong Q1 Sep 15
The order book is ₹2.55 trillion (7.7x FY26 revenue) with a further ₹1.8 trillion pipeline. Q1 FY27 profit rose 15% YoY to ₹1,581 crore and revenue rose 14.4% to ₹5,515 crore, on a debt-free balance sheet.
- IMRH ₹13,500 cr nears CCS Sep 2
The costing committee cleared ₹13,500 crore for design development of the 13-tonne IMRH, which is meant to replace the Mi-17, and the proposal now goes to the CCS. The SAFHAL JV with Safran will develop the 3,500-4,000 shp Aravalli engine to power it.
- Su-57 local production under discussion Sep 18
The Kremlin confirmed on Sep 8 that the Su-57 is on the bilateral agenda. HAL says it already has about 40% of the needed infrastructure from Su-30MKI production but would need more capex, and no timeline is fixed. A 100-aircraft commitment could pull resources from AMCA.
- 105 Il-114-300 deal signed Sep 10
Russia and India signed a deal for 105 Il-114-300 turboprop regional aircraft, per TASS, with HAL associated. HAL's scope and the deal value were not disclosed.
- Safran LEAP forgings agreement Sep 21
HAL signed a long-term agreement with Safran Aircraft Engines in August to supply superalloy turbine ring forgings for the CFM LEAP engine programme. This expands its civil aerospace supply work.
- ED Finance R Sriram retires Sep 28
Executive Director (Finance) R Sriram retires effective Sep 30, 2026, as disclosed to BSE and NSE on Sep 28.
- New independent director appointed Sep 10
Dr. Nikhil Agarwal was appointed additional independent director for a three-year term from Sep 9, 2026, subject to shareholder approval.
- FY27 statutory auditor named Sep 8
The CAG appointed B K Ramadhyani & Co. LLP as HAL's statutory auditor for FY2026-27.
- CSR policy revised Sep 4
HAL revised its Corporate Social Responsibility Policy, now available in the Investors section of its website.
TL;DR: HAL's fundamentals are getting stronger. Engine supply is improving (10 F404s received), it has delivered HTT-40s, Dhruv NG helicopters and the last LCA trainers, a ₹1.1 lakh crore ALH AON is in place, and brokerages are bullish with targets of ₹5,481-6,800. The main risk is still Tejas Mk1A execution: no aircraft delivered yet, integration work still ongoing and GE supply-chain reliability uncertain. That helps explain why the stock fell about 10% from ₹5,029 on Sep 9 to around ₹4,550-4,650 despite the good news. The trend is improving, and the first Mk1A handover to the IAF in the coming months is the key catalyst for a re-rating.
Quarterly Results
| Particulars | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 | Sep 2024 | Dec 2024 | Mar 2025 | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 3,915 | 5,636 | 6,061 | 14,769 | 4,348 | 5,976 | 6,957 | 13,700 | 4,819 | 6,629 | 7,699 | 13,942 | 5,515 |
| Expenses | 3,039 | 4,108 | 4,626 | 8,867 | 3,357 | 4,336 | 5,275 | 8,405 | 3,537 | 5,071 | 5,828 | 8,884 | 3,988 |
| Operating Profit | 877 | 1,528 | 1,435 | 5,901 | 991 | 1,640 | 1,683 | 5,295 | 1,282 | 1,558 | 1,871 | 5,059 | 1,527 |
| OPM % | 22% | 27% | 24% | 40% | 23% | 27% | 24% | 39% | 27% | 24% | 24% | 36% | 28% |
| Other Income | 414 | 474 | 467 | 569 | 742 | 560 | 637 | 669 | 757 | 895 | 927 | 1,164 | 912 |
| Interest | 0 | 0 | 0 | 31 | 0 | 0 | 0 | 8 | 0 | 0 | 1 | 4 | 0 |
| Depreciation | 201 | 350 | 212 | 644 | 149 | 178 | 277 | 736 | 185 | 226 | 310 | 634 | 304 |
| PBT | 1,089 | 1,651 | 1,689 | 5,795 | 1,584 | 2,023 | 2,042 | 5,219 | 1,854 | 2,227 | 2,487 | 5,584 | 2,134 |
| Tax % | 25% | 25% | 25% | 26% | 9% | 25% | 30% | 24% | 25% | 25% | 25% | 25% | 26% |
| Net Profit | 814 | 1,237 | 1,262 | 4,309 | 1,437 | 1,510 | 1,440 | 3,977 | 1,384 | 1,669 | 1,867 | 4,196 | 1,590 |
| EPS in Rs | 12.17 | 18.49 | 18.86 | 64.43 | 21.49 | 22.59 | 21.53 | 59.46 | 20.69 | 24.96 | 27.91 | 62.74 | 23.77 |
Profit & Loss
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 | TTM |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 15,939 | 16,758 | 17,950 | 18,520 | 20,008 | 21,445 | 22,755 | 24,620 | 26,927 | 30,381 | 30,981 | 33,089 | 33,785 |
| Expenses | 13,560 | 14,285 | 14,719 | 15,071 | 15,457 | 16,531 | 17,397 | 19,205 | 20,242 | 20,630 | 21,360 | 23,301 | 23,771 |
| Operating Profit | 2,379 | 2,474 | 3,231 | 3,449 | 4,551 | 4,914 | 5,357 | 5,415 | 6,686 | 9,752 | 9,621 | 9,788 | 10,014 |
| OPM % | 15% | 15% | 18% | 19% | 23% | 23% | 24% | 22% | 25% | 32% | 31% | 30% | 30% |
| Other Income | 1,650 | 1,608 | 1,058 | 776 | 376 | 423 | 365 | 985 | 1,673 | 1,923 | 2,608 | 3,743 | 3,897 |
| Interest | 15 | 6 | 16 | 35 | 178 | 360 | 267 | 65 | 64 | 43 | 22 | 24 | 6 |
| Depreciation | 822 | 863 | 681 | 947 | 1,025 | 999 | 1,178 | 1,111 | 1,785 | 1,407 | 1,340 | 1,355 | 1,474 |
| PBT | 3,191 | 3,213 | 3,592 | 3,243 | 3,725 | 3,979 | 4,277 | 5,225 | 6,510 | 10,225 | 10,867 | 12,152 | 12,432 |
| Tax % | 25% | 38% | 27% | 39% | 37% | 28% | 24% | 3% | 10% | 25% | 23% | 25% | — |
| Net Profit | 2,399 | 2,004 | 2,625 | 1,990 | 2,328 | 2,883 | 3,239 | 5,080 | 5,828 | 7,621 | 8,364 | 9,116 | 9,321 |
| EPS in Rs | 24.89 | 27.72 | 36.3 | 29.76 | 34.82 | 43.1 | 48.44 | 75.96 | 87.14 | 114 | 125 | 136 | 139 |
| Div. Payout % | 20% | 31% | 30% | 54% | 28% | 39% | 31% | 26% | 32% | 31% | 32% | 33% | — |
Balance Sheet
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity Capital | 482 | 362 | 362 | 334 | 334 | 334 | 334 | 334 | 334 | 334 | 334 | 334 |
| Reserves | 16,322 | 10,671 | 12,198 | 9,177 | 11,748 | 12,914 | 15,078 | 18,979 | 23,238 | 28,804 | 34,647 | 40,707 |
| Borrowings | 165 | 80 | 1,022 | 905 | 4,116 | 5,927 | 51 | 49 | 52 | 50 | 51 | 66 |
| Other Liabilities | 47,370 | 45,420 | 38,163 | 38,047 | 35,298 | 35,027 | 37,815 | 40,892 | 45,652 | 51,723 | 73,665 | 93,288 |
| Total Liabilities | 64,339 | 56,532 | 51,744 | 48,463 | 51,496 | 54,203 | 53,278 | 60,254 | 69,276 | 80,911 | 1,08,698 | 1,34,395 |
| Fixed Assets | 7,366 | 6,925 | 7,350 | 7,566 | 7,459 | 7,357 | 7,491 | 6,766 | 6,834 | 6,737 | 6,671 | 7,293 |
| CWIP | 235 | 1,025 | 1,389 | 1,462 | 1,502 | 2,043 | 2,078 | 2,473 | 1,885 | 2,493 | 3,098 | 3,313 |
| Investments | 570 | 916 | 994 | 1,010 | 910 | 991 | 1,056 | 1,363 | 1,458 | 1,591 | 1,754 | 1,914 |
| Other Assets | 56,168 | 47,666 | 42,011 | 38,425 | 41,625 | 43,812 | 42,654 | 49,653 | 59,099 | 70,089 | 97,176 | 1,21,875 |
| Total Assets | 64,339 | 56,532 | 51,744 | 48,463 | 51,496 | 54,203 | 53,278 | 60,254 | 69,276 | 80,911 | 1,08,698 | 1,34,395 |
Cash Flow
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating | — | — | -404 | -748 | -7,700 | 1,527 | 15,263 | 10,173 | 8,830 | 8,223 | 13,643 | 10,906 |
| Investing | — | — | 3,012 | 597 | 5,294 | -1,339 | -1,271 | -12,785 | -5,728 | -6,410 | -10,771 | -8,337 |
| Financing | — | — | -164 | -2,540 | 2,326 | 64 | -7,125 | -1,464 | -1,731 | -1,999 | -2,579 | -3,350 |
| Net Cash Flow | — | — | 2,443 | -2,691 | -80 | 252 | 6,867 | -4,076 | 1,370 | -186 | 294 | -781 |
| Free Cash Flow | — | — | -1,907 | -2,000 | -9,094 | 148 | 13,947 | 8,676 | 7,054 | 6,476 | 11,890 | 8,438 |
| CFO/OP | — | — | 20 | 22 | -145 | 68 | 298 | 207 | 173 | 105 | 179 | 142 |
Ratios
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debtor Days | 144 | 105 | 86 | 133 | 227 | 191 | 90 | 69 | 64 | 55 | 55 | 45 |
| Inventory Days | 1,104 | 1,016 | 879 | 870 | 881 | 815 | 605 | 607 | 527 | 544 | 736 | 859 |
| Days Payable | 103 | 91 | 64 | 72 | 113 | 163 | 76 | 96 | 116 | 116 | 156 | 116 |
| Cash Conversion Cycle | 1,145 | 1,030 | 900 | 931 | 995 | 843 | 620 | 580 | 475 | 484 | 634 | 788 |
| Working Capital Days | 39 | -5 | 74 | 101 | 221 | 185 | 141 | 111 | 38 | 37 | 121 | 301 |
| ROCE % | — | 23% | 29% | 27% | 29% | 24% | 26% | 30% | 31% | 39% | 34% | 32% |
Insights
BetaAI-extracted from concalls & annual reports · figures as reported, with sources
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Documents
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Company Information
Hindustan Aeronautics Ltd (HAL), a 71.64% Government-owned Maha-Ratna CPSE, designs, manufactures, upgrades and provides lifecycle MRO for aircraft, helicopters, aero -engines, avionics /accessories and aerostructures, principally for India’s armed forces.[1]
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