Shares of Hindustan Aeronautics Limited (HAL) rose 4.25 per cent to hit an intraday high of Rs 1,113.00 on BSE after the company said it has placed an order of Rs 5,375 crore for 99 F404-GE-IN20 engines and support services with GE Aviation, the USA to power the Tejas Light Combat Aircraft.
“This is the largest ever deal and the purchase order placed by HAL for LCA,” R Madhavan, CMD, HAL said. The Company is working closely with GE for its support to pursue the export potential of LCA and also to supply spares to the global supply chain of GE 404 engines, he said.
“The indigenously built Tejas aircraft is one of the best in its class globally, powered by F404-GE-IN20 engines and has been in service since 2004,” HAL said.
The stock opened 3 per cent higher at Rs 1098.00 against the previous close of Rs 1067.60. With a market capitalisation of Rs 37,013.35 crore, the share stands higher than 5 day, 20 day and 200 day moving averages but lower than 50 day and 100 day moving averages. The large cap stock has risen 30.5 per cent since the beginning of this year.
According to MarketsMojo, the company has high management efficiency with a high ROE of 20.29% and has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 0.68 times. The stock is trading at a fair value compared to its average historical valuations and With an ROE of 21, it has an ‘Attractive’ valuation with a 2.3 Price to Book Value.
However, the technical trend has deteriorated from Bullish on August 17, 2021, and the stock is technically in a Mildly Bullish range now. Multiple factors for the stock are Bullish like MACD, KST and OBV.
“HAL expects to have a net cash surplus of Rs 7,000-Rs 8,000 crore in FY22. We see HAL’s potential book to bill at 5x at FY22E-end). We maintain BUY with a target price of Rs 2,618/share (~140% upside),” ICICI Securities said.
Ordering of the engines marks a major milestone in the execution of 83 LCA contract with IAF, the company said, adding that the co-operation will be further enhanced with the manufacturing of GE F414 engines in India for the upcoming LCA MkII program.
The F404 family engines have logged in more than 14 million engine flight hours, and have powered 15 different production and prototype aircraft, the release added.
(With Inputs from PTI)