HAL shares fall 8%: Here’s why the defence PSU is under pressure
- 4th February 2026
- 03:25 PM
- 4 min read
Summary
Shares of Hindustan Aeronautics Ltd fell up to 8% on Wednesday after media reports said the defence PSU has been excluded from India’s next-generation stealth fighter jet programme (AMCA). The decline also comes against the backdrop of subdued sentiment in defence stocks following the Union Budget.Mumbai | February 4
Shares of Hindustan Aeronautics Ltd (HAL) came under sharp selling pressure on Wednesday, falling as much as 8% in intraday trade after a media report indicated that the company is no longer in contention for India’s next-generation stealth fighter jet project.
The stock declined to an intraday low of ₹4,097.60 on the NSE, reversing gains from the previous session and emerging as one of the top laggards in the defence space.
What triggered the fall in HAL shares
According to few news reports three private-sector companies have been shortlisted to develop and manufacture India’s next-generation fighter aircraft under the Advanced Multirole Combat Aircraft (AMCA) programme, while HAL has been excluded from the process.
The shortlisted companies include Tata Advanced Systems, Larsen & Toubro and Bharat Forge. The final selection is expected within the next three months after the shortlisted firms submit detailed commercial proposals.
Why the AMCA programme matters
The AMCA programme is one of India’s most ambitious defence aviation projects, aimed at developing an indigenous fifth-generation stealth fighter aircraft for the Indian Air Force. The platform is expected to play a key role in India’s combat fleet from the mid-2030s.
The programme is being led by the Aeronautical Development Agency (ADA), which retains design authority. The selected private partner will work with ADA on prototype manufacturing, integration and testing.
The government has allocated an indicative budget of around ₹15,000 crore for the prototype development phase, under which five prototypes are expected to be built. Once the aircraft is proven, the Indian Air Force is likely to place an initial order of at least 120 jets, with deliveries projected to begin around 2035.
Why HAL’s exclusion raised concerns among investors
HAL has historically been the principal manufacturer and integrator of military aircraft programmes in India. Its reported exclusion from the AMCA shortlist raised concerns among investors about the company’s participation in future high-value fighter aircraft platforms.
Market participants said the development signals a growing shift towards greater private-sector involvement in advanced defence manufacturing and that exclusion from such a high-value programme could affect HAL’s future revenue visibility from next-generation platforms, weighing on investor sentiment.
Budget overhang adds to pressure
The decline in HAL shares also comes amid broader weakness in defence stocks following the presentation of the Union Budget earlier this month. While defence capital expenditure was increased, the Budget did not announce major new policy initiatives or programme-specific triggers for the sector.
Several defence stocks had corrected sharply in the session following the Budget, with some frontline and mid-cap names falling between 5% and 10%.
PL Capital View on HAL
PL Capital has maintained a positive long-term view on Hindustan Aeronautics, citing the company’s role as the primary supplier of military aircraft to the Indian armed forces, a robust order book of over ₹1 trillion, and continued policy support for indigenous defence procurement.
The average price target for the stock stands at around ₹5,507, indicating potential upside from current levels.
Separately, market analysts said clarity on HAL’s role in future defence programmes, execution of its existing order book and updates on ongoing platforms will be key factors influencing investor sentiment going forward. In the near term, developments around the AMCA programme and further policy cues for the defence sector are expected to remain in focus.
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