Shares of Hindustan Aeronautics Limited (HAL) surged by five percent in early trade on June 18, following an announcement that the state-run company had received a ‘Request For Proposal’ (RFP) from the Ministry of Defence. The RFP pertains to the procurement of 156 light combat helicopters, a significant development for HAL in bolstering its defence equipment portfolio.
Out of the total helicopters proposed for procurement, 90 are earmarked for the Indian Army, underscoring the strategic importance of enhancing aerial capabilities for ground operations. The Indian Air Force is set to receive the remaining 66 helicopters, aimed at augmenting its fleet and operational readiness.
An RFP serves as a formal invitation to qualified contractors, detailing the project requirements and inviting bids. HAL’s successful bid receipt highlights its competitive prowess and standing in the defence manufacturing sector, leveraging its technical expertise and track record in delivering advanced aerospace solutions.
As of 9:20 am, HAL shares were trading at Rs 5,457.95 on the National Stock Exchange (NSE), marking a five percent increase from the previous day’s closing price. The market response reflects investor optimism surrounding HAL’s potential to secure and execute a substantial defence contract, further solidifying its position in the industry.
While HAL has not disclosed specific financial details of the contract, media reports estimate its value to be approximately Rs 50,000 crore. This substantial order underscores the government’s commitment to bolstering indigenous defence capabilities and supporting domestic manufacturing under the ‘Make in India’ initiative.
Recently, on June 14, HAL received a ‘buy’ recommendation from Jefferies, a global financial services firm, with a target price of Rs 5,725 per share. Jefferies cited HAL’s focus on indigenisation and export opportunities as key drivers for its bullish outlook, projecting a potential 12 percent upside from current levels.
“We expect HAL to sustain double-digit growth over the next 3-5 years, buoyed by positive sentiments surrounding defence indigenisation and export prospects. HAL benefits from high technological entry barriers, positioning it favorably in the market,” noted Jefferies in a recent research note.
The brokerage firm also highlighted that HAL’s current market valuations may not fully capture its robust competitive advantages and near-monopoly status in certain segments of the defence sector. Over the past year, HAL’s stock has surged by an impressive 170 percent, significantly outperforming the broader Nifty 50 index, which posted a gain of around 25 percent during the same period.
In conclusion, HAL’s latest development with the RFP for light combat helicopters signifies a major stride towards strengthening India’s defence capabilities and fostering indigenous manufacturing. With strong institutional backing and a promising growth trajectory, HAL remains poised to capitalize on emerging opportunities in the global aerospace and defence markets.
