Defence Stock: JP Morgan bullish on this Maharatna PSU; Sees 26% upside from current levels — Do you own?

Defence Stock to Buy: Hindustan Aeronautics Limited (HAL) announced its financial results for the second quarter of FY26 on Wednesday, November 12, reporting steady growth in profit and revenue despite pressure on margins.

The Maharatna public sector enterprise, HAL, plays a central role in designing, manufacturing, and maintaining aircraft and helicopters for the Indian armed forces.

The company has also been expanding its export footprint and joint ventures with global defence firms. The state-run aerospace and defence firm also attracted mixed reactions from brokerages following its operational performance.

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HAL Q2FY26 Results

HAL posted a consolidated net profit of Rs 1,669 crore for the July–September quarter, a 10.5 per cent increase from Rs 1,510 crore in the same period last year.

The Bengaluru-based company’s revenue from operations rose 11 per cent to Rs 6,629 crore, compared with Rs 5,976 crore a year earlier.

The company’s net income, which includes other sources, climbed 15.3 per cent year-on-year to Rs 7,516 crore from Rs 6,519 crore in Q2FY25.

However, operating profit (EBITDA) declined 5 per cent to Rs 1,558 crore, as against Rs 1,640 crore in the corresponding quarter last year.

This led to a contraction in EBITDA margin to 23.5 per cent, from 27.4 per cent in the same period a year ago.

Earnings per share (EPS) improved to Rs 24.96 from Rs 22.59 last year. For the first half of FY26 (H1FY26), HAL’s net profit grew 3.5 per cent to Rs 3,053 crore, while revenue increased 11 per cent to Rs 11,448 crore compared with Rs 10,324 crore in H1FY25.

HAL Share Price Target

JP Morgan maintained an “Overweight” rating on HAL but cut its target price to Rs 6,004 from Rs 6,105, upside of 26.4 per cent. The brokerage noted that while revenue and profit growth were stable, the margin compression reflected near-term cost pressures.

Morgan Stanley retained an “Equalweight” stance with a target price of Rs 5,092, citing a “Q2 operational miss.”

The firm pointed out that revenue, EBITDA, and PAT growth came in at +2 per cent, -10 per cent, and +7 per cent, respectively, versus estimates.

The EBITDA miss was attributed to a lower-than-expected gross margin of 56.1 per cent and higher provisions at 7.8 per cent of revenue, though profit after tax beat estimates due to higher other income of Rs 890 crore.