HAL is an A /T+1 group Aerospace & Defense company with having Face value of Rs. 10.  Hindustan Aeronautics is engaged in the business of Manufacture of Aircraft and Helicopters and Repair, Maintenance of Aircraft and Helicopters which plays a strategic role in India’s defense program being the only Indian company having specialization in aircraft manufacturing and providing its Maintenance and related services. Company spends ~6% to 7% of the total revenue into the research and development activity annually and increased R&D reserve from 10% to 15% of PAT last year to build a sufficient R&D reserve. The company has an order book position of Rs 84,000 crore and another Rs 50,000 crore worth of orders are in the pipeline. Foreign countries such as Argentina and Egypt have evinced interest in buying the HAL-built Light Combat Aircraft 'Tejas'. HAL also signed an MoU for establishing an office in Kuala Lumpur (Malaysia) for tapping the new business opportunities for Fighter Lead-in Trainer (FLIT) LCA and other requirements of Royal Malaysian Air Force (RMAF) like Su-30 MKM and Hawk upgrades.

Fundamentals (FY22-23):

Financial Results:

Company’s Net Sales was Rs 12,494.67 crore in March 2023 up 8.07%, Quarterly Net Profit at Rs. 2,831.18 crore in March 2023 down 8.82% and EBITDA stands at Rs. 3,968.02 crore in March 2023 up 32.25% as compared to March 2022.

Key Points:

1. GE Aerospace, the US-based aircraft engine supplier signed MoU with India's public defence firm Hindustan Aeronautics Ltd (HAL) to produce fighter jet engines F414 engines for the Indian Air Force (IAF) in India.
2. HAL signed a contract with Argentinian Air Force (AAF) for supply of spares and engine repair of legacy two tonne class helicopters. It is a stepping stone for the future engagements and defence co-operation between India and Argentina.
3. Hindustan Aeronautics Limited (HAL) and General Atomics Aeronautical Systems Incorporated (GA-ASI) have jointly announced that turbo-propeller engines which power the state-of art MQ-9B Guardian High Altitude Long Endurance (HALE) Remotely Piloted Aircraft System (RPAS) will be provided by the HAL Engine Division at Bengaluru for the Indian market.
4. HAL signed a Memorandum of Understanding (MOU) with Response Plus Holding PJSC (RPM), a leading healthcare provider of emergency medical services, remote healthcare services and occupational health solutions in the United Arab Emirates. They will explore new opportunities for cooperation in the areas of Emergency Medical Services, Medical Evacuation, Helicopter Emergency Medical Services and other mutually-beneficial fields in India, the Gulf region and the MENA Region.
5. The company recently received ITSO authorisation from DGCA for its indigenously developed Cockpit Voice Recorder (CVR) and Flight Data Recorder (FDR) during ongoing Aero India 2023.
6. The company’s new aircraft, HAL aircraft ‘Hindustan 228-201 LW’ has been approved by the DGCA. It has maximum take-off weight of 5695 kgs with 19 passenger capability.
7. HAL signed a contract with Govt. of Mauritius (GoM) for export of one Advanced Light Helicopter (ALH Mk III) for Mauritius Police Force. The Govt. of Mauritius already operates HAL built ALH and Do-228 aircraft. With this contract, HAL and GoM have further strengthened the long-standing business relations spanning over three decades.
8. Intent of Cooperation (IOC) has been recently signed between HAL and PHL for purchase or long-term lease for 20 helicopters, 10 each civil variants of ALH Dhruv and Light Utility Helicopters.  It would also bring synergy between HAL and PHL in helicopter ecosystem and strengthen helicopter business in India’s civil aviation market. It has also signed MoU with Israel Aerospace Industries (IAI) to convert Civil (Passenger) aircraft to Multi Mission Tanker Transport (MMTT) aircraft in India.
9. HAL and BEL signed a contract for co-development and co-production of Long-Range Dual Band Infra-Red Search and Track System (IRST) for Su-30 MKI under the MAKE-II procedure of Defence Acquisition Procedure (DAP) 2020, as part of the ‘Make in India’ initiative. The system will enhance the Indian Air Force’s air superiority.
10. Hindustan Aeronautics Limited (HAL) and Safran Helicopter Engines have signed an agreement to create a new joint venture intended to develop helicopter engines and establishing a new aero-engine company in India. It will be dedicated to the development, production, sales and support of helicopter engines and one of its main objectives will be to meet the requirements of HAL and Ministry of Defence’s future helicopters, including the 13-ton IMRH (Indian Multi-Role Helicopter).
11. HAL recently signed a contract worth over US$100 million for supply and manufacture of 88 TPE331-12B engines/kits along with maintenance and support services to power the Hindustan Trainer Aircraft (HTT-40).
12. HAL-L&T consortium recently bagged Rs 860 crore contract for end-to-end realization of five Polar Satellite Launch Vehicles (PSLV) over a period of four years from the NewsSpace India Limited (NSIL) which is a newly developed entity of ISRO with a sole purpose of enabling Indian industries to scale up high-technology manufacturing and production base for meeting the needs of the Indian space programme.
13. IAC-1 Vikrant which was commissioned recently as INS Vikrant by the Prime Minister at Kochi are powered by four General Electric LM2500 Gas Turbines supplied by HAL. These Gas Turbines were assembled and tested at HAL’s dedicated facility at Bangalore. With the power of 88 MW and top speed of 28 Knots, INS Vikrant is truly enhancing the maritime capability of India.
14. Recently President of India inaugurated HAL’s state-of-the-art Integrated Cryogenic Engine Manufacturing Facility (ICMF) in Bengaluru. The facility will cater to the entire Rocket Engine Manufacturing under one roof for ISRO and boost self-reliance in manufacturing of Hi-thrust Rocket engines.
15. Recently HAL handed Over 16th ALH Mk III and got LoI for 9 More from Indian Coast Guard. ALH Mk III is indigenously designed, developed and produced by HAL.  The company has so far produced more than 330 ALHs, a versatile helicopter which has logged more than 3.74 lakhs of flying hours.

In last 1 year the stock gave a return of 110 % as compared to the rise of Sensex and Nifty in the same period.

HAL has received significant payments from its clients in FY2021 which continued in H1FY2022 due to which the external debt has been fully repaid with healthy cash balances of Rs. 14,000 crores as on August 29, 2022 so the company has a zero debt to equity ratio. Mutual Fund Holding in the company has increased by 1.4% in the last quarter to 8.8. Considering the company being market leader in defense sector backed by the government’s push towards manufacturing and development in India under “Make in India” and “Atmanirbhar Bharat” campaigns and exporting to the world from India, aggressive defence budget, high dividend payout and good financial performance, healthy order book position and Rs. 55000 crore worth of orders in pipeline, the company is recommended for long term period. Company has recently announced the stock split in the proportion of 1:2 and declared a final dividend and of ₹15 for the FY 2022-23 so this can be the best opportunity for investors for making a fresh investment in this company.

HET ZAVERI

info@smartinvestment.in

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