Prabhudas Lilladher keeps Buy on HAL and lifts target price to INR5,943

what happened

According to TradingView, Prabhudas Lilladher described Hindustan Aeronautics' (HAL) second-quarter FY27 results as mixed. Revenue rose about 14.9% year on year, which the brokerage linked to better project execution. EBITDA margin, however, fell 65 basis points to 22.8% as gross margin declined, partly offset by lower other expenses.

The brokerage sees an order inflow of roughly INR1.0 trillion over the next two years, spanning ALH helicopters, Su-30 upgrades, Dornier planes and engines. On the LCA Mk1A programme, HAL has received 14 GE F404 engines through October 2026 and has built about 27 airframes awaiting final testing, with around 10 jets targeted for delivery to the Indian Air Force by March 2027. Other developments include a final agreement with Safran for the SAFHAL joint venture on the Aravalli helicopter engine, the takeover of Hatsoff Helicopter Training from CAE, and a Defence Acquisition Council approval for Light Multi Role Helicopters estimated at about INR200 billion.

The brokerage keeps its Buy rating and raised its target price to INR5,943 from INR5,795, based on 35x P/E for September 2028.

why it matters

For the broader market this is one brokerage's view on a single company, not a sector-wide event. Investors following Indian defence stocks may read it as a sign of a strong order pipeline, while the margin squeeze in the quarter is the figure to watch. The target price reflects the brokerage's valuation model rather than a forecast for the shares. Long-cycle defence programmes also tend to make revenue timing harder to predict from quarter to quarter.

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