HAL shares retreat lower after hitting new ATH for second day; MS sees 21% downside

Hindustan Aeronautics share price: Shares of Hindustan Aeronautics (HAL) after marking a fresh all-time high for the second consecutive day on Friday (May 17, 2024) were seen trading week. At the time of writing this copy at around 9:44 am, shares of the state-run defense major traded with a cut of over 2 per cent at Rs 4,510, after having hit a new all-time high of Rs 4,664 in early trade.

The decline in the stock comes as global brokerage Morgan Stanely maintained its ‘overweight’ view on the counter post its Q4 earnings released on the previous day. The target price set out by the brokerage is Rs 3,636, signifying a potential downside of 21 per cent over the previous close. The brokerage noted that the company’s earnings beat is led by strong margin, with Q4 adjusted EBITDA margin at 32.8 per cent, up 676 bps on-year. Furthermore, the company’s order backlog reported at Rs 94,000 crore, translates to 3.3x TTM sales.

Morgan Stanley expects revenue, EBITDA and PAT to log 14 per cent, 11 per cent and 23 per cent CAGRs, respectively, over FY23-26.

Meanwhile, another foreign brokerage Nomura continues with its ‘buy’ on HAL and a target of Rs 4,750, implying a potential run-up of just over 3 per cent.

HAL Q4FY24 results

For the reporting quarter, the company logged a 52 per cent increase in consolidated profit after tax (PAT) at Rs 4308.71 crore. In the same quarter last year, HAL's PAT was recorded at Rs 2831.19 crore. 

The company posted an 18 per cent growth on a year-on-year (YoY) basis in its consolidated revenue to Rs 14,768.7 crore. The same was at Rs 12494.67 crore in Q4FY23. According to Zee Business research, the defense company was estimated to register a net profit of Rs 2,872 crore and revenue of Rs 14,137 crore for the fourth and final quarter of the last financial year.

HAL delivered an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin of 40 per cent for the March quarter of FY24. The company had delivered an EBITDA margin of 26 per cent during the same quarter last year. It recorded Q4FY24 EBITDA at Rs 5,901.1 crore.

HAL's share price performance

The PSU major logged healthy gains in its share price over the past one year to the tune of 190 per cent, while its 1-month return is at 21 per cent.