HAL shares fall 11% in 3 days: Know why
What's the story
Shares of Hindustan Aeronautics Limited (HAL) plunged nearly 5% in Monday's trading session. The fall extends a three-day losing streak, with the stock down over 11% during this period. The decline comes after HAL's March quarter earnings missed expectations and concerns over delayed deliveries of the Tejas Mk1A aircraft continued to weigh on investor sentiment.
Financial performance
HAL's profit rises to nearly ₹4,200cr in March quarter
HAL reported a 5.5% year-on-year increase in net profit for the March quarter. The company's net profit stood at ₹4,196 crore, up from ₹3,977 crore in the same period last year. However, brokerages flagged operational weaknesses and execution concerns despite higher treasury income and other income contributing to the headline profit beating estimates.
Market reactions
Jefferies and UBS highlight operational weaknesses
Jefferies maintained its 'Buy' rating with a target price of ₹6,300 but noted that March quarter EBITDA was 10% below estimates due to a revenue miss. The brokerage also cut its FY27-FY28 earnings estimates by 3-8% on account of weaker gross margins. UBS kept its 'Sell' rating with a target price of ₹3,200, stressing concerns over execution and long-term growth visibility due to no Tejas deliveries so far.
Future prospects
CLSA sees near-term triggers in HAL's performance
CLSA maintained its 'Outperform' rating with a target price of ₹5,265. It highlighted that HAL's earnings were supported by engine deliveries, helicopters, and treasury income. The brokerage also pointed to the commencement of Mk1A deliveries and clarity on the GE Aerospace engine deal as key near-term triggers for the company's performance.