HAL Receives ‘Overweight’ Rating from Morgan Stanley, Stock Soars 60% in 6 Months

In a significant development, international brokerage firm Morgan Stanley has bestowed an ‘overweight’ rating upon Hindustan Aeronautics Ltd (HAL) following the company’s acquisition of a Rs 5,250-crore contract from the defence ministry. The stock has witnessed a remarkable surge of 60% over the past six months, outpacing the benchmark Nifty 50 index.

Morgan Stanley has set a target price of Rs 3,129 per share, indicating a marginal 0.8% downside from the last closing price of Rs 3,155. The contract in question involves the procurement, manufacture, and supply of aero-engines for MiG-29 aircraft, a vital component for the operational capabilities of the Indian Air Force (IAF). HAL’s Koraput division will spearhead the production, aligning with the government’s ‘Make in India’ initiative.

Notably, UBS had initiated coverage on HAL earlier, setting a target price of Rs 3,600 on January 5. The foreign broking firm emphasized the depletion of India’s military aircraft strength, geopolitical factors, and the need for increased aircraft availability as key drivers for accelerated ordering and a manufacturing ramp-up at HAL.

HAL’s order book, standing at Rs 80,000 crore in FY23, is expected by UBS to triple to Rs 2.4 lakh crore in FY26, driven by a surge in defence expenditure. The Budget 23-24 allocated Rs 5.94 lakh crore to the defence sector, marking a 13% increase over the previous year.

In a further strategic move, on February 9, PTC Industries and HAL signed a memorandum of understanding to collaborate on raw materials, components, and spares for aircraft and helicopters, aligning with the nation’s self-reliance goals.

While HAL’s stock performance has outpaced the market with a 60% surge in the last six months, investors are closely watching the company’s trajectory as it leverages key contracts and partnerships to solidify its position in the aerospace and defence sector.

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