HAL shares gain over 3% after sources say ₹62,000 crore purchase of fighter jets cleared

Shares of state-run defence equipment manufacturer Hindustan Aeronautics Ltd. (HAL) gained as much as 3.3% on Wednesday, August 20, after sources are indicating that the company is likely to receive a big purchase order.

Government sources told CNBC-TV18 that the Cabinet Committee on Security (CCS) has cleared the purchase of 97 Light Combat Aircraft (LCA) Mark1A fighter jets worth ₹62,000 crore from HAL.

An official confirmation would mean one of the largest purchase orders for the state-run enterprise, where the fighter jets would be indigenously developed.

The Light Combat Aircraft Mark1A is an upgraded version of the Tejas fighter jet, which is developed by HAL. It is built to replace the ageing fleet of MiG-21 fighter jets.

Brokerage firm UBS has maintained its “neutral” recommendation on HAL with a price target of ₹4,900. The brokerage said that this will be the second MK1A order for HAL, after the one it received in February 2021. It expects deliveries for MK1A to commence with 6 of those jets to be delivered in the current financial year, with the F404 engine issue now behind.

Out of the 22 analysts that have coverage on Hindustan Aeronautics, 17 of them have a “buy” rating on the stock, three say “hold”, while two have a “sell” recommendation.

Shares of HAL are trading 2.6% higher at ₹4,560. The stock has now extended its year-to-date advance to 10%.