Defence stock to buy: Analysts suggest buying this stock for long-term, check targets

Domestic stock market benchmarks, the Sensex and the Nifty 50 fell slightly on Wednesday, May 15, with losses led by shares of select heavyweights such as HDFC Bank and Tata Motors. 

Sensex ended 118 points, or 0.16 per cent, lower at 72,987.03, while the Nifty 50 ended 17 points, or 0.08 per cent, lower at 22,200.55.

Meanwhile, let's take a look at this defence stock for a long-term buying perspective suggested by analysts.

Defence stock to buy

Zee Business analyst Kushal Gupta suggests investors buy Hindustan Aeronautics Limited (HAL), one of the prominent defence stocks in India, for one year. On Wednesday, May 15, the stock closed at Rs 4,183.7 each, up 2.67 per cent or 108.70 per share on BSE.

Hindustan Aeronautics - Share price target

Gupta has given a target price of Rs 4,800 per share. The target implies an upside of around 15 per cent from Wednesday's (May 15) closing price.

ICICI Securities' view on HAL stock

The brokerage believes that HAL is strongly placed to benefit from pick-up in the execution of the existing strong order backlog and robust pipeline. ICICI Securities estimates defence company's revenue, EBITDA and PAT to grow at 11.5 per cent, 11.3 per cent and 12.0 per cent CAGR respectively over FY23-26E.

The brokerage further mentions that the valuation at 29.8x P/E on an FY26E basis looks attractive given the strong growth ahead led by multiple sectoral tailwinds.

SS WealthStreet's founder Sugandha Sachdeva's view of HAL

"The shares of Hindustan Aeronautics Limited (HAL) have been on a remarkable uptrend, reaching an all-time high and surging nearly 50 per cent since the start of the year. This defence major has maintained a steady climb for the past seven months. HAL's outlook for 2024 is highly favorable, supported by substantial government contracts, conducive policies, and a strong focus on boosting defence production and exports," said Sachdeva.

She further added that HAL's stock has formed a strong base at the Rs 2,800 mark in February and has been on an upward trend since. While some profit booking can be seen but the stock is trading well above its key moving averages and it is prudent to look for buy-on-dips opportunity as long as the stock is holding above the 3,300 mark on a closing basis.

According to her, with sentiments bullish for the stock even amidst heightened volatility in markets, the confluence of various indicators indicates that the shares of HAL are likely to tread on the upward incline towards Rs 4,660 initially and then the Rs 5,050 mark.

HAL Q4FY24 preview

HAL is yet to announce its financial results for the fourth quarter of fiscal 2024. However, as per Zee Business Research desk estimation, the company’s consolidated revenue for Q4FY24 is to increase 13.1 per cent year-on-year (YoY) to Rs 14,137 crore as against Rs 12,495 crore reported in the same quarter last year.

EBITDA or earnings before interest, taxes, depreciation, and amortisation- is estimated to rise by 29 per cent to Rs 4,196 crore from Rs 3,246 in Q4FY23. HAL's PAT may increase by 2 per cent to Rs 2,872 per cent as compared with last year's same period, according to the analysts.

HAL stock performance

HAL shares have rewarded investors with a return of over 170 per cent in the past 12 months. The company's shares have jumped almost 50 per cent on a year-to-date (YTD) basis and provided almost 2x returns in the last six months.

Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers consult their investment advisers before making any financial decision.

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