Hindustan Aeronautics Limited (HAL) is an Indian state-owned aerospace and defence company, headquartered in Bangalore. The company was established in 1940, HAL is amongst the oldest and largest aerospace and defence manufacturers in the world today. HAL initiated their aircraft manufacturing in 1942 with licensed production of Harlow PC-5, Curtiss P-36 Hawk and Vultee A-31 Vengeance for the Indian Air Force. Presently, HAL has 11 dedicated Research and development (R&D) centres and 21 manufacturing divisions under 4 production units in India.
HAL is managed by a Board of Directors appointed by the President of India through the Ministry of Defence, Government of India. HAL is currently involved in designing and manufacturing of fighter jets, helicopters, jet engine and marine gas turbine engine, avionics, software development, spares supply, overhauling and upgrading of Indian military aircraft.
The company is the India’s biggest manufacturer in defence aeronautics, with the competence to design, manufacture, repair, and service aircrafts, helicopters, aero engines, avionics.
Currently the company is involved into multiple government flagship programmes, such as manufacturing of Tejas fighter jets. The company has been able to develop excellent technical capabilities. The company has assistance through the partnership with global giants namely BAe, Safran, Russian Helicopters, Israel Aerospace Industries, etc. The company is independent in the manufacturing and servicing of most of the critical aircraft required by the Indian Air Force.
HAL has materialized as a strong IPO even though the company was founded in 1940, through our government’s initiative on targeting of development on domestic manufacturing and restriction on imports. The company has got its shine because of the government’s focus and increased capex. The company has an active order book of about Rs 84,00 crore, that is 4 times its yearly revenue. In the first half of the current fiscal year, the company has received orders worth Rs 10,250 crore, amongst which Rs 8496 crore were related to the repair and service segment.
The order pipeline is concurrently powerful with anticipation of orders for advanced light helicopters, light utility helicopters, polar satellite launch vehicles, Dornier aircraft, and many others. In November, the company has delivered 16 advanced light helicopters and received orders for additional 9 to be included into the Indian Coast Guard.
HAL is hugely overbought in the rally arising out of the crash of 2020. The stock has been on bull run and the price has overextended far away from the 100-day moving average. MFI is at 72 points which concludes that the stock is overbought. If we look at the retracement levels, the stock has achieved its 261.8% retracement target level and faces heavy resistance. A breakout over this level will take the stock to the 423.6% retracement level target at Rs 3898 which is fairly possible in the coming years. However, accumulation of this stock must be performed only on corrections. HAL is an excellent government-based company for the long-term portfolio.
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