Hindustan Aeronautics (HNAL IN) – Q2FY26 Result Update – Decent Q2; back ended LCA deliveries in focus – BUY
Published on 12 Nov 2025
Hindustan Aeronautics (HAL) delivered a 10.9% YoY revenue growth, likely supported by improved execution, though EBITDA margin contracted by 394bps YoY owing to higher provisions. The company further reinforced its leadership in India’s defence and aerospace ecosystem by securing the long-awaited order for 97 LCA Tejas Mk1A aircraft valued at ~Rs620bn, alongside a $1.0bn contract with GE Aerospace for 113 F404-IN20 engines to power these jets. During the quarter, HAL’s Nashik division achieved a major milestone with the maiden flight of its first Tejas Mk1A. On the strategic front, HAL is leading a consortium bidding for the AMCA program, which, if awarded, could be a transformative opportunity for the next decade. Additionally, the company entered the passenger aircraft manufacturing segment through an MoU with Russia’s UAC to produce the Sukhoi Superjet 100 (SJ-100) domestically, marking a significant diversification into civil aviation. However, the pace of F404 engine deliveries from GE remains a concern, with HAL receiving only four out of twelve engines committed for the year. The stock is currently trading at a P/E of 34.4x/31.3x on FY27/28E earnings. We maintain ‘Buy’ rating and roll forward to Sep’27E valuing the stock at a PE of 38x Sep’27E (40x Mar’27E earlier) arriving at a TP of Rs5,507 (Rs5,500 earlier).
