HAL Q3 profit rises 14%, should you buy?

Hindustan Aeronautics Ltd (HAL) reported a 14 per cent year-on-year (YoY) increase in its third-quarter profit for FY25, reaching Rs 1,440 crore, compared to Rs 1,261 crore in the same period last year. The company’s revenue from operations grew 15 per cent YoY to Rs 6,957 crore, driven by strong demand from the defence ministry and execution of its order pipeline.

Mixed reactions after Q3 results

Shares of Hindustan Aeronautics Ltd (HAL) gained nearly three per cent on February 13 after the defence PSU posted a 14 per cent YoY rise in Q3 net profit to Rs 1,440 crore. Revenue increased 15 per cent YoY to Rs 6,957 crore, supported by strong execution of defence orders. However, some brokerages trimmed their target prices despite maintaining a positive outlook on HAL’s long-term growth.

Morgan Stanley trims target but stays overweight

Morgan Stanley retained its overweight stance on HAL, but lowered its target price to Rs 4,958 from Rs 5,135. The brokerage remains confident about the company’s growth trajectory, citing strong order inflows and execution capabilities. It expects orders worth Rs 1,65,000 crore in the coming quarters, driven by demand for Sukhoi aircraft, engines, and indigenous fighter jets.

Other brokerages highlight HAL’s strong pipeline

Analysts believe HAL is well-positioned for sustained revenue growth due to the Indian government’s focus on defence indigenization. The company recently secured a Rs 13,500 crore order for 12 Sukhoi fighter jets, adding to its robust order book. HAL is also gearing up for the rollout of its first Tejas MK-1A fighter jet from its Nashik facility by the end of FY25.

Stock movement and valuation concerns

Despite the strong Q3 earnings, HAL’s stock has been under pressure in recent months. The stock declined 24 per cent over the past six months but remains a multibagger, having surged 200 per cent over two years. Some analysts point to valuation concerns as a reason for the target price revisions, as HAL’s market capitalization now stands at Rs 2,40,501 crore.

Outlook: Long-term growth intact

While near-term stock volatility may persist, HAL’s robust defence pipeline, consistent order inflows, and government support are expected to drive long-term growth. Investors will be watching for further orders and execution updates, with the defence sector remaining a key growth driver for the company.