Shares of Hindustan Aeronautics Ltd., a public-sector enterprise with Navaratna status administered by the Indian government's Ministry of Defence, rallied 2.65% to ₹3,860 apiece during early trade on Friday.
This came after General Electric's unit on Thursday said that it had signed an agreement with HAL to make fighter jet engines for the Indian Air Force, as reported by Reuters. The agreement includes the potential joint production of GE Aerospace's F414 engines in India, and the engines will be used to power Tejas fighter jets.
Hindustan Aeronautics previously said it planned to use the engine for a second generation of light combat aircraft and it was in talks over domestic production of the engines, the report added.
In May, Reuters reported that the Biden administration was poised to sign off on a deal that would allow GE to produce jet engines powering Indian military aircraft.
GE first began working with Hindustan Aeronautics and the Aeronautical Development Agency in 1986 to support the development of India's light combat aircraft with F404 engines, according to the report.
In March, HAL's Nashik division bagged an order from the defence ministry to manufacture HTT-40 basic trainer aircraft for the Indian Air Force (IAF). The HTT-40 is a turboprop aircraft that is designed for good low-speed handling qualities and to provide better training effectiveness.
The shares of HAL reached a new record high of ₹3,950 per share on June 19, driven by robust order wins, increased budget allocation, and the government's emphasis on reducing defence imports and promoting domestic procurement.
So far this year, the stock has delivered an impressive return of 48.62%. Furthermore, in CY22, the stock achieved outstanding growth, culminating in a remarkable return of 109%.
The government has allocated a budget of ₹5.94 lakh crore for the defence sector in the union budget for 2023–24, which is an increase of 13% compared to the previous year's allocation of ₹5.25 lakh crore.
In terms of financial performance, the company achieved a 14.72% increase in its consolidated net profit, reaching ₹5,828 crore for the fiscal year ending on March 31, 2023. This represents a notable improvement compared to the previous fiscal year, where the company recorded a net profit of ₹5,080 crore.
Furthermore, the revenue from operations witnessed a healthy growth of 9.37%, amounting to ₹26,927 crore during the same period. According to data from Trendlyne, HAL maintains a debt-free status, reflecting a strong financial position.
The government retains a significant stake in the company, holding approximately 71.7% of shares as of the end of Q4 FY23.
08 analysts polled by MintGenie on average have a 'buy' call on the stock.
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