HAL

Expands Capacity, Diversifies into Civil Aviation

reported robust Q3FY26 results, with revenues rising 11% YoY to ₹7,699 crore and net profit surging 29.6% YoY to ₹1,867 crore. Margins improved modestly, supported by scale and higher other income. Backed by a massive order book of ₹2,50,000 crore, easing supply-chain constraints, and capacity expansion, HAL is entering a more efficient production phase. Diversification into civil aviation and partnerships further strengthen its long-term growth outlook. Financial Performance - Revenue: ₹7,699 crorFinancial Performance - Revenue: ₹7,699 crore, +11% YoY. - EBITDA: ₹1,871 crore, +11.2% YoY; margin 24.3%. - Net profit: ₹1,867 crore, +29.6% YoY, aided by 45% jump in other income. - Order book: ₹2,50,000 crore, ensuring visibility till 2032. Key Defence Programs - Tejas Mk1A: Requirement of 180 aircraft; nine airframes ready, awaiting engines. - GE deal: $1 billion for 113 engines, ensuring steady supply (24–30 engines annually from FY27–28). - Pipeline: IMRH, LCH, CATS, ALH worth ₹4,50,000 crore over next decade. - Recent MoD deal: Eight Dornier-228 aircraft worth ₹2,312 crore. Capacity Expansion - Bengaluru facility: Aircraft production capacity rising from 16 to 24 units annually. - Nashik greenfield hub: To produce 30 helicopters annually within two years. - Investment: ₹15,000 crore over five years for infrastructure and ROH facilities. Diversification Strategy - Civil aviation revenue target: Increase from 5% to 25% over next decade. - Pawan Hans contract: ₹1,800 crore for 10 Dhruv NG helicopters. - Partnership with Russia’s UAC: Manufacturing SJ100 regional jets, targeting domestic market of 200+ aircraft. Valuation & Outlook - Revenue growth guidance: 8–10% FY26, double-digit FY27. - EBITDA margin target: ~31%, supported by indigenous products and MRO services. - Valuation: 24.8x FY28E earnings, reasonable given growth visibility. - Risks: Execution delays in Tejas Mk1A, private competition, import dependence.