--- title: "JM Financial initiates on Hindustan Aeronautics with 'Buy', sees 20% upside" type: "News" locale: "en" url: "https://longbridge.com/en/news/282291042.md" description: "JM Financial has initiated coverage on Hindustan Aeronautics (HAL) with a 'Buy' rating, valuing the company at 29 times its post-COVID historical average. The target price is set at ₹4,875, indicating a potential upside of over 20% from the current price of ₹4,033. The brokerage cites significant demand for aircraft due to gaps in the Indian Air Force's fleet and expects strong revenue growth driven by upcoming projects. Key risks include delays in order finalization and competition from private players." datetime: "2026-04-09T21:07:32.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/282291042.md) - [en](https://longbridge.com/en/news/282291042.md) - [zh-HK](https://longbridge.com/zh-HK/news/282291042.md) --- # JM Financial initiates on Hindustan Aeronautics with 'Buy', sees 20% upside **Hindustan Aeronautics share price today:** Domestic brokerage JM Financial has initiated coverage on Hindustan Aeronautics, a public sector aerospace and defence company, with a ‘Buy’ rating. HAL remains India’s largest defence PSU and the country’s sole indigenous manufacturer of defence aircraft. The brokerage has valued HAL at around 29 times its post-COVID historical average, reflecting a strong pipeline of prospects. Based on FY28E earnings per share (EPS) of ₹168, the brokerage has set a target price of ₹4,875. Given the stock correcting about 22 per cent over the past six months, compared to an 8 per cent decline in the Nifty, JM Financial believes much of the headwinds are already priced in, making the current risk-reward favourable. The target implies an upside of over 20 per cent from Thursday, April 9, closing price of ₹4,033 on the NSE. Around 10:30 AM, shares of Hindustan Aeronautics were trading at ₹4,109, up 1.9 per cent. The stock touched an intraday high of ₹4,138.60 on the NSE. In comparison, the benchmark NSE Nifty 50 was quoting at 24,034 levels, up by 248.80 points or 1.09 per cent. ### Here's why JM Financial is bullish on HAL: IAF fleet gaps to drive aircraft demand According to JM Financial, the Indian Air Force has inducted only two types of aircraft between 1987 and 2014, leading to significant capability gaps. While recent additions like Tejas Mk1A and Rafale offer some support, the current squadron strength has declined to around 29, well below the required 42, with several legacy platforms like MiG-29, Mirage 2000 and some Jaguars nearing retirement in the 2030s. To address this gap, analysts said India is likely to undertake a significant expansion across existing platforms such as Tejas and Sukhoi, while also advancing new programmes like MFRA and AMCA. In the interim, IAF needs to upgrade its existing fleet to at least fourth-generation levels, making fighter aircraft a key growth driver over the next decade. Additionally, replacement demand for ageing transport aircraft and helicopters can also offer some support. ### Air defence capex to drive ₹9 tn opportunity Air defence is expected to remain a core focus area for India’s defence capital expenditure, supported by evolving warfare dynamics and the rising importance of aerial threats. According to JM Financial, interactions with Defence Secretary Rajesh Singh indicate around 20 per cent CAGR in government capex on capital acquisition, with a strong push towards air warfare, including drones, loitering munitions, radar systems, and underwater defence. Amid this, Hindustan Aeronautics, as a leading PSU in large aircraft platform manufacturing, is well placed to benefit. The brokerage expects a strong addressable opportunity of around ₹9 trillion in the air defence segment over the next 6-7 years. ### Earnings outlook JM Financial expects deliveries of the LCA Tejas Mk1A to begin from FY27, which, along with ongoing execution of projects such as ALH, LCH, and HTT-40, could drive strong manufacturing revenue growth of over 50 per cent CAGR during FY26-28. With the Repair and Overhaul (ROH) segment projected to grow at around 8 per cent CAGR over FY26-28E, in line with management guidance, the brokerage projects an overall revenue CAGR of 21 per cent for HAL over FY26-28. As the share of manufacturing revenue increases, particularly from large platform deliveries, Ebitda margins are expected to moderate, leading to an estimated Ebitda CAGR of 19 per cent and EPS CAGR of 14 per cent over the same period. In its base case, JM Financial assumes that LCA Tejas Mk1A deliveries will commence from FY27. However, any delay could result in downside risks of 8 per cent, 8 per cent, and 6.5 per cent on revenue, Ebitda, and EPS estimates, respectively, for FY27, and 7 per cent, 7 per cent, and 5 per cent for FY28. However, key risks include delays in order finalisation, potential import substitution, and an increasing role of private players in large platform orders. JM Financial estimates order prospects of ₹2 trillion in the bear case, ₹4.7 trillion in the base case, and ₹8.6 trillion in the bull case for HAL’s manufacturing segment. _**(Disclaimer: Views and outlook shared belong to the brokerage/analysts and are not endorsed by Business Standard. 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