Comments
Target: ₹5,590
CMP: ₹4,779.30
Hindustan Aeronautics (HNAL IN) revenue (adjusted) rose 21 per cent y-o-y to ₹14,220 crore in Q4FY24, 7 per cent ahead of our estimates. Repair & overhaul (ROH) revenue may have grown faster than manufacturing in Q4. FY24 revenue stood at ₹29,830 crore, up 14 per cent.
Growth was driven by deliveries of multiple platforms -five light combat aircraft (LCA) trainer variant, six advanced light helicopters (ALH), 15 RD-33 engines and exports of two Dornier 228 aircraft to Guyana. Developmental revenue declined 44 per cent y-o-y to ₹1,500 crore in FY24. Management expects revenue to grow 13 per cent in FY25, led by 15-18 per cent growth in manufacturing revenue (aided by LCA Tejas Mk-1A deliveries - 16 targeted) while ROH could grow by 8-9 per cent on a consistent basis.
We revise to Buy from Accumulate, with a higher TP of ₹5,590 from ₹4,100. Our revised TP is driven by expectations from a new stream of the exports business, surge in inflows of ₹1.6 lakh crore, rising margin, and sustained double-digit earnings growth. We believe the rising share of indigenization along with unexplored exports opportunity in the aircraft & helicopter industry warrant a rerating.
Key risks to our call include lower spend in the defence capital budget, less domestic procurement allocation, increased competition from the private sector, and delay in execution.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.