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Informist, Tuesday, Feb. 11, 2025

By Sunil Raghu

AHMEDABAD – Hindustan Aeronautics Ltd. is expected to post steady earnings growth for the December quarter, aided by its manufacturing order book, and growth in repair and overhaul operations, and its spares business, analysts said. The company is expected to report a 5.7% on-year rise in its net profit to INR 13.3 billion in Oct-Dec, while revenue is seen rising 7.5% to INR 65.2 billion, according to the average of estimates from five brokerage houses. For Oct-Dec of 2023, the company had reported a net profit of INR 12.5 billion on a revenue of INR 60.6 billion.

The Bengaluru-based public sector aviation and avionics major, which got 'Maharatna' status last year, is engaged in the design, development, manufacture, repair and overhaul of a wide range of aircraft, helicopters and aero engines along with making industrial marine gas turbines. Analysts' estimates for HAL's Oct-Dec net profit range from INR 10.9 billion by brokerage Nirmal Bang Equities Pvt Ltd to INR 14.1 billion by ShareKhan Ltd. The estimates for revenue range from INR 62 billion by Sharekhan, to INR 71.5 billion by Nirmal Bang.

During the December quarter, HAL bagged orders worth INR 135 billion from the Ministry of Defence to supply 12 Su-30 MKI aircraft to Indian Air Force, taking its announced intake in the manufacturing segment to INR 395 billion this financial year so far, out of the company's guidance of INR 470 billion for 2024-25 (Apr-Mar), analysts said. Nomura sees the contribution from the Sukhoi engine order to partly mitigate the delay in delivery of the light combat aircraft, Tejas, amid engine supply disruptions.

Nirmal Bang in its report said that HAL is enhancing its civilian helicopter, ALH Dhruv, with a modern glass cockpit and is working towards civil certification for the Shakti engine, broadening its application beyond the defence sector. Furthermore, HAL will provide the Tejas Mark-1A fighter aircraft to the Indian Air Force by March, it states. Accordingly, it has upheld a 'buy' rating on the stock with a target multiple of 24 times March 2026, earnings per share.

Brokerage Prabhudas Lilladher expects the company's Oct-Dec revenues to grow 7% on year, driven by continued execution of manufacturing order book and steady growth in repair and overhaul operations. Nirmal Bang in its report refers to management guidance of 15-18% revenue growth for FY25-FY28, with repair and overhaul services expected to contribute 9-10% to its total revenues.

Prabhudas Lilladher expects the company's earnings before interest, tax, depreciation and amortisation margins, or EBITDA margins, to remain flattish on year at 23.7% in Oct-Dec. Nomura states that a favorable product mix towards services and spares would result in healthy margins for HAL.

The company will declare its December quarter earnings on Wednesday.

Market participants are looking for the management's commentary on provision expenses, F-404 engine deliveries for the light combat aircraft project, F-414 engine status and updates on the light combat helicopter order.

At 1209 IST, shares of Hindustan Aeronautics traded at INR 3,650.30 on the National Stock Exchange, down 3.6%.

Following are the Oct-Dec earnings estimates for Hindustan Aeronautics based on reports from five brokerage firms in the descending order by estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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