HAL Q3 Results Review - Growth Visibility Remains Strong: ICICI Direct

ICICI Direct Report

Hindustan Aeronautics Ltd.'s revenue for the quarter came in at Rs 5665.5 crore (down 3.8% YoY); lower than our estimate of Rs 6032.1 crore. The de-growth during the quarter was likely on account of muted execution in manufacturing contracts (which account for 75% of the total order book) as a large part of this order book is yet to see meaningful execution.

Sequentially, revenue increased 42%. For nine months-FY23, revenue was up 10.5% YoY, mainly on account of substantial growth seen during Q1 FY23.

HAL's gross margin was at 56.1% (versus our estimate of 51%); improved from 49.6% in Q3 FY22. This was mainly on account of lower raw material cost, which declined 16.2% YoY.

Ebitda margins came in at 17.4% (versus estimate of 24.3%); down 682 bps YoY despite an improvement in gross margins. This was mainly on account of a significant increase in others cost (up 149.5% YoY). The provisions amount in others cost was at Rs 808.5 crore, up 129% YoY. The 9MFY23 Ebitda margin was at 23.8% against 22.3% for 9MFY22.

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