📌 At a Glance
Hindustan Aeronautics Ltd (HAL) has clocked a whopping ₹8,364 Cr net profit in FY25, while keeping debt at a ridiculous ₹1 Cr. Yes, one crore. Not a typo. But despite this, revenue growth has slowed to a crawl (just 2% YoY). After a blockbuster rally of 75% over 3 years, is this PSU defence giant finally running out of thrust?
🛫 1. About the Company
HAL is India’s most decorated aerospace and defence PSU — a Make-in-India dream before that slogan was even cool.
- 👨✈️ Makes fighter jets (Tejas), helicopters (Dhruv), and soon — armed drones
- 🛠️ Handles repair, overhaul, and support for IAF’s entire flying zoo
- 🤝 Partners with Rolls Royce, Safran, GE for engines and tech transfer
- 🇮🇳 Serves Indian Air Force, Army, Navy, DRDO, and exports to 20+ countries
Basically, if India flies it, HAL probably built or repaired it.
🧑✈️ 2. Key Managerial Personnel (KMP)
| Name | Designation |
|---|---|
| Shri C.B. Ananthakrishnan | Chairman & Managing Director |
| Shri Sanjay Jaju | Government Nominee Director |
| Shri Rajeev Kumar | Director (Operations) |
| Shri Amit Satija | New Govt Nominee (from May 2025) |
📣 May 2025 Update: Two GMs retired, and a new Government nominee joined. Classic PSU moves — every quarter is a game of director musical chairs.
📊 3. Financials (FY21–FY25 Recap)
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) | ROCE (%) | Debt (₹ Cr) | Cash from Ops (₹ Cr) |
|---|---|---|---|---|---|---|
| FY21 | 22,882 | 3,246 | 48.53 | 26 | 53 | 15,117 |
| FY22 | 24,620 | 5,080 | 75.96 | 30 | 49 | 10,173 |
| FY23 | 26,927 | 5,828 | 87.14 | 31 | 52 | 8,830 |
| FY24 | 30,381 | 7,621 | 113.96 | 39 | 50 | 8,223 |
| FY25 | 30,981 | 8,364 | 125.07 | 34 | 1 | 13,643 |
📈 5-Year CAGR:
- Net Profit: 24%
- Revenue: 8%
- EPS: 🚀 from ₹48.53 to ₹125.07
💸 Dividend: Consistently ~30% payout, but FY25 saw a dip to 20%. Is HAL hoarding for CAPEX?
🧮 4. Forward-Looking Fair Value (FV) Estimate
- Current EPS (FY25): ₹125.07
- Assume 15–18x forward P/E (defence PSU peers trade in this range)
🔮 Fair Value Range = ₹1,875 – ₹2,250
At CMP ₹4,989, HAL is trading at nearly 40x earnings, which is high for a PSU (unless we’re pricing in war with Mars).
📦 5. Order Book, Growth & Sector Outlook
May 2025 Investor Concall Key Highlights:
- 🔐 ₹1.25 lakh crore order book (as of FY25 end)
- ✈️ 180+ fighter jets, 300+ helicopters in pipeline
- 🏭 CAPEX of ₹14K–15K Cr over next 3 years
- 📦 Deliveries of Tejas Mk-1A to ramp up in FY26
- 🤖 Drone and unmanned aerial vehicle (UAV) biz being scaled up
- 🛡️ Defence budget remains robust even in election years
💡 Defence is the one sector where “over-budget” is a feature, not a bug.
🧠 6. EduInvesting Take
HAL is the crown jewel of Indian defence manufacturing. But here’s what we really think:
✍️ “HAL is the kind of PSU where even the balance sheet has six-pack abs. No debt, solid margins, and more orders than a Zomato on Diwali. But trading at 9.5x book value and 40x P/E? That’s less ‘Make-in-India’, more ‘Priced-for-Perfection.’”
💥 Investors chasing defence hype may want to ask: is HAL still in “supersonic” mode or entering a “holding pattern”?
🚨 7. Risks & Red Flags
- 📉 Sales Growth Deceleration: Just 2% YoY revenue growth in FY25
- 👥 Promoter Holding Decline: Down 3.51% over 3 years
- 🐌 Working Capital Days: Worsened to 92 days (from 38 two years ago)
- 💰 Valuation Froth: 40x P/E for a PSU — feels more Silicon Valley than South Block
- 🧾 Board Composition Issues: Secretarial compliance report flagged issues and fines
- 🪖 Geopolitical Overhang: Order flows can stall if peace breaks out (yes, irony)
📦 8. Peer Comparison (As of June 2025)
| Company | CMP (₹) | P/E | ROCE (%) | Q4 PAT (₹ Cr) | Q4 Sales Growth |
|---|---|---|---|---|---|
| HAL | 4,989 | 39.9 | 33.9 | 3,977 | -7.24% |
| Bharat Electronics | 390.7 | 53.6 | 38.9 | 2,127 | 6.84% |
| Garden Reach | 3,252 | 70.6 | 37.2 | 244 | 61.6% |
| Zen Tech | 2,083 | 67.1 | 36.7 | 113.7 | 129.8% |
| Data Patterns | 3,064 | 77.3 | 21.6 | 114.1 | 117.3% |
🤯 HAL leads in scale, but others are growing faster — and being rewarded with even higher P/Es.
📈 9. Stock Price Recap
- 📅 5-Year Price CAGR: 72%
- 📅 3-Year Price CAGR: 75%
- 📅 1-Year Price Return: 5% 😐
🧮 From ₹3,000 to nearly ₹5,700 — HAL has already had its bull run. Now it’s hovering.
🧾 10. Final Verdict
HAL is the poster boy for PSU reform and defence self-reliance. It has all the fundamentals you’d want:
✅ Clean balance sheet
✅ Strong ROCE and ROE
✅ National importance
✅ Monster order book
But… it’s priced like a private sector SaaS stock, not a government-run aerospace firm. Any slowdown in delivery, global peace deal, or budget cut could cause serious altitude loss.
🏷️ Tags:
HAL, Hindustan Aeronautics, Defence Stocks India, PSU Rally 2025, HAL Share Price Target, HAL FY25 Results, EduInvesting 5-Year Recap, Defence Manufacturing India, Is HAL Overvalued
🖊️ Author: Prashant Marathe
📅 Date: June 8, 2025
