HAL shares up by more than 1% as company gets new order of Rs 62,000 crore

 As of 9:45 AM, on August 20, the shares of Hindustan Aeronautics Limited (HAL) are on the rise. The stock is up by 1.79% at Rs 4,532.20. The broader Nifty 50 index is up by 0.078% at this time. The rise in the stock is due to Indian government placing a Rs 62,000 crore order with HAL.

According to reports, India’s Cabinet Committee on Security has cleared a significant order to buy 97 Light Combat Aircraft (LCA) Mark1A fighter jets, with an estimated value of ₹62,000 crore. A formal announcement is expected at any time, and will mark a major operational boost for HAL. HAL has been working on replacing the old MiG-21 fleet in India under the Tejas programme.

The Mark1A fighter jets are an upgraded version of the Tejas jets. They are designed to ensure better combat capabilities. This is the second order for the Mark1A fighter jets after HAL secured a contract in February 2021. The February 2021 order included the deliveries of 83 jets with an estimated value of ₹48,000 crore.

The order is a good sign for HAL after it reported a mixed performance in its June quarter results. The company’s net profit declined by 3.7% YOY at ₹1,383.8 crore. However, its revenue from operations increased by 10.8% to ₹4,819 crore. EBITDA rose by 30% and margins also expanded to 26.7%.

The order aligns with Prime Minister Narendra Modi’s push that India must be self-reliant when it comes to defence manufacturing. HAL is also well-positioned currently with a host of projects under its pipeline. It is building a range of indigenous fighter jets and helicopters. If executed well, it can allow HAL to increase its operational effectiveness and post better financial results in the future.

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Source : NSE