1. At a Glance

HAL is India’s aerospace crown jewel — building fighter jets, helicopters, and all the repair-maintenance wizardry our armed forces need. Financially, it’s a beast: ROE at 26%, debt-free, and five-year PAT CAGR of 24.5%. Yet, it’s also got aworking capital cycle longer than an Air India boarding line— 634 days! And while profit growth has flown, sales growth over 5 years has been a modest 7.6%.

2. Introduction

Imagine a company that makes Sukhois, Tejas fighters, and Dhruv helicopters — HAL is that rare PSU which is both strategically critical and actually profitable. It’s also one of the few defence firms with the capacity to design, manufacture, and maintain aircraft at scale.

But here’s the kicker: HAL isn’t a classic fast-moving corporate — its sales cycle depends on big-ticket government contracts, approvals, and milestone-linked payments. Translation? Cash flow doesn’t flow, itmeanders. Still, in the world of defence PSUs, HAL is the poster child of efficiency… relatively speaking.

3. Business Model (WTF Do They Even Do?)

HAL is split into:

• Aircraft Manufacturing– Fighters, trainers, transport aircraft.
• Helicopters– Dhruv, Rudra, LUH, and now the upcoming IMRH.
• Overhaul & Maintenance– Lifecycle support for aircraft & helicopters.
• Avionics & Systems– Navigation, radar, weapon integration.

It’s a vertically integrated PSU with R&D centres, assembly plants, and service hubs. Customers? Primarily the Indian Air Force, Navy, and Army — plus a sprinkling of exports.

Roast note: It’s like having a monopoly on making Ferrari engines for one client — but that client takes a year to pay you.