HAL was listed on the NSE and BSE on March 28, 2018. In the last five years, the company has given a massive return of more than 1100% to its investors. Will HAL continue to provide such great returns in the future as well? Let’s explore HAL growth potential and HAL share price target from 2025 to 2050 in this article.
About HAL
Hindustan Aeronautics Limited (HAL), an Indian aerospace and defence company, was founded in 1940. It designs, develops, and produces aircraft, helicopters, and other aerospace components for the Indian Armed Forces. HAL also offers upkeep, repairs, and a services for both military and civilian aircraft. HAL has contributed significantly to India’s defence sector over the years by producing fighter jets, transport aircraft, and advanced avionics.
HAL Business Model
- Aircraft Manufacturing: HAL earns money by manufacturing fighter jets, helicopters, and transport planes for the Indian Air Force, Navy, and other organisations.
- Aerospace Components: HAL supplies defence and space agencies with critical aircraft components such as engines, avionics, and other parts.
- Maintenance and Repair Services: HAL performs maintenance, repair, and upgrades on aircraft and helicopters to ensure their long-term capability.
- Exports: HAL generates revenue by exporting aircraft, spare parts, and aerospace technology to other countries.
- Partnerships and Collaborations: HAL collaborates with international defense companies to develop advanced aircraft and technology, resulting in revenue from joint ventures and contracts.
- Space Sector Contributions: HAL produces components for India’s space missions, earning money by supplying critical parts to ISRO and other space agencies.
HAL Fundamental Analysis
| Stock Name | Hindustan Aeronautics Limited |
|---|---|
| NSE Symbol | HAL |
| Market Cap | ₹ 2,28,490 Cr. |
| 52W High | ₹ 5675 |
| 52W Low | ₹ 2914 |
| Stock P/E | 26.4 |
| Book Value | ₹ 465 |
| Dividend Yield | 1.02 % |
| ROCE | 38.9 % |
| ROE | 28.9% |
| Face Value | ₹ 5.00 |
| Shareholders | March 2023 | March 2024 | Dec 2024 |
|---|---|---|---|
| Promoters | 71.65% | 71.64% | 71.64% |
| FIIs | 9.07% | 12.42% | 12.26% |
| DIIs | 13.93% | 9.58% | 8.13% |
| Government | 0.00% | 0.00% | 0.03% |
| Public | 5.34% | 6.36% | 7.95% |
| No. of Shareholders | 3,58,317 | 7,14,091 | 12,75,632 |
Key Factors Driving HAL Future Growth
- Government Defence Orders: The Indian government continues to order fighter jets, helicopters, and other defence equipment, generating the majority of HAL’s revenue. As India’s defence budget increases, HAL’s business is expected to grow.
- Indigenous Aircraft Development: HAL is developing advanced aircraft such as the Tejas fighter jet and the AMCA. These projects will help HAL’s future growth as India seeks to reduce dependency on foreign defense equipment.
- Maintenance and upgrades: HAL not only manufactures aircraft but also maintains and upgrades older models. This ensures a consistent income because air forces require routine maintenance and advancement of their fleets.
- Helicopter Production Growth: HAL is developing and producing helicopters such as the Light Utility Helicopter (LUH) and Light Combat Helicopter (LCH). Increased demand for these helicopters will help HAL expand even further.
- Collaboration with the Private Sector: HAL is working with private companies to improve production efficiency. This will allow HAL to meet increasing demand faster and improve its capabilities.
- Advanced Technology and R&D: HAL invests in research and development to improve aircraft and defence systems. HAL will remain competitive in the future thanks to innovations in aviation and defence technology.
- Growing Aerospace Market: The demand for aircraft and defence equipment is increasing in India and around the world. This will benefit HAL as more countries seek reliable and cost-effective solutions.
- Government Policies and Make in India: The Indian government is promoting self-reliance in defence manufacturing. HAL, as a state-owned company, will benefit from this initiative through additional projects and funding.
- Partnerships with Global Companies: HAL is working with international defence firms to bring new technology and manufacturing expertise. These collaborations will enable HAL to expand its capabilities and improve product quality.
Pros of HAL
- Strong Profit Growth: HAL has achieved a strong profit growth of 33% CAGR over the last three years.
- High Return on Capital Employed (ROCE): HAL has maintained an average ROCE of 30% over the last five years, which shows that the HAL is using its capital efficiently to generate profit.
- High Return on Equity (ROE): HAL has maintained an average ROE of 26.6% over the last five years, which shows that the HAL is using shareholders funds efficiently to generate profits.
- Low PE Ratio Compared to Peers: HAL has a PE ratio of 26.4, which is lower than the industry average of 60.8, making it relatively undervalued and potentially a good investment opportunity.
- Debt Free Company: HAL is debt free company with a debt to equity ratio of 0, which shows its financial stability.
- High Promoter Holding: HAL has a strong promoter holding of 71.6%, indicating the promoters’ high confidence in the company’s future growth and stability.
- Increase in FIIs Holding: Foreign Institutional Investors (FIIs) have increased their holding to 12.26% in December 2024 from 11.85% in September 2024, which indicates growing confidence in the HAL future potential by the FIIs.
Cons of HAL
- High Price to Book Value: HAL is trading at a Price-to-Book Value (P/B) ratio of 7.35, which indicates that its stock is significantly overvalued compared to its book value.
- Decrease in DIIs Holding: Domestic Institutional Investors (DIIs) have reduced their holding to 8.13% in December 2024 from 8.37% in September 2024, indicating a decline in DIIs confidence in the company’s future growth prospects.
| Years | Target Price |
|---|---|
| HAL Share Price Target 2025 | ₹4300 to ₹5300 |
| HAL Share Price Target 2026 | ₹5200 to ₹6900 |
| HAL Share Price Target 2027 | ₹6350 to ₹9000 |
| HAL Share Price Target 2028 | ₹7500 to ₹11700 |
| HAL Share Price Target 2029 | ₹9000 to ₹16000 |
| HAL Share Price Target 2030 | ₹11000 to ₹21000 |
| HAL Share Price Target 2035 | ₹22500 to ₹62500 |
| HAL Share Price Target 2040 | ₹45000 to ₹188000 |
| HAL Share Price Target 2050 | ₹180000 to ₹1123000 |
Conclusion
HAL has grown significantly over the last five years, delivering exceptional returns to its investors. HAL is well-positioned for future growth, thanks to strong government support, increased defence orders, and advances in indigenous aircraft development. Its focus on exports, maintenance services, and collaborations with private and global companies increases its future potential. Despite its high PB ratio, HAL’s debt-free status, strong profitability, and rising foreign investment indicate that investors believe in its long-term potential. For the latest updates, you can visit HAL official website.
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.