Brokerage keeps buy tag on HAL with 28 percent upside target after strong Q2 profit

Financial Results

Hindustan Aeronautics Limited reported a 16 percent year-on-year increase in consolidated profit after tax to 1,935.64 crore rupees for the second quarter of financial year 2027, up from 1,669.05 crore rupees in the same period last year. Revenue from operations rose nearly 15 percent year-on-year to 7,613.25 crore rupees against 6,628.61 crore rupees previously. Expenses increased around 16 percent year-on-year to 6,132 crore rupees during the quarter under review. The Maharatna central public sector enterprise released these financial results during market hours on Thursday.

Market View And Brokerage

International brokerage Citi kept its buy rating on the defence major and maintained a target price of 6,175 rupees per share, suggesting an upside potential of about 28 percent from its previous close of 4,809.80 rupees. In the previous trading session, HAL shares fell 0.7 percent. Recent selling pressure pushed the stock down 3.5 percent in one week, 1 percent in one month and 3 percent in three months. However, the stock gained 4 percent in six months, 1 percent in one year and delivered multibagger returns of around 600 percent over five years.

Operational Performance

Citi stated that second-quarter revenue matched its estimates, though EBITDA missed expectations because of weaker gross margins. The company's work on engines, helicopters and repairs helped offset delays in the Tejas Mk1A delivery ramp-up. HAL's inventory grew 39 percent year-on-year, showing higher preparedness to execute orders. Management guided for financial year 2027 revenue growth of 10 to 12 percent and an EBITDA margin of 30 to 31 percent. Analysts view rising Tejas Mk1A output, better execution capacity, government support and management guidance as positive for earnings.

Context

Defence public sector undertakings in India often experience delivery schedules linked to complex technology development and testing phases. Brokerages regularly evaluate these state-backed firms based on order execution capabilities and inventory accumulation patterns.