HAL Hits A Record High As Antique Stock Broking Sees Scope For Rerating

Shares of Hindustan Aeronautics Ltd. hit a record high after Antique Stock Broking cited a scope of rerating given its large order book amid India's quest for modernising its armed forces.

Antique Stock Broking initiated coverage on the stock with a 'buy' rating and a target price of Rs 3,140 apiece—an implied return of 30%. There would be a meaningful rerating of the stock given the strong order book of around Rs 84,800 crore, unprecedented order pipeline, and expected growth pickup from FY24, the brokerage said.

India's largest state-run defence company has been showcasing LCA Tejas to scale-up exports and is favourably placed to receive an 18-aircraft order from Malaysia, according to Antique Stock Broking. HAL is also in talks with Argentina, Australia, Egypt, U.S., Indonesia, and Philippines for exporting the Tejas aircraft, it said.

The LCA Tejas could help in scaling up exports with the brokerage expecting its sales to rise significantly from the current 1% of its exports. The brokerage also expects success in procuring orders from friendly countries to boost growth outlook.

The shares of the company rose more than 8%, the most in intraday trade in a month, to hit a record high of Rs 2,638.35 apiece on Monday. The stock closed with 7.4% gains, extending its winning streak to the twelfth session.

The trading volume was nearly thrice the 30-day average when markets closed on Monday. The Relative Strength Index was at 88, suggesting the stock may be overbought.

All nine analysts tracking the company reiterated 'buy', according to Bloomberg data. The 12-month consensus price target implies an upside of 7.5%.

(Corrects an earlier version that stated HAL received an 18-aircraft order from Malaysia.)