Hindustan Aeronautics hits 52-week high as valuation exceeds growth prospects despite strong Q1

Shares of Hindustan Aeronautics Ltd soared to a 52-week peak following quarterly results, but analysts remain cautious, citing valuation concerns amid shaky near-term delivery forecasts.

Hindustan Aeronautics Ltd shares climbed to a 52-week high after the company’s first-quarter results, but Nuvama Institutional Equities still trimmed its view on the stock to “Hold”, saying the valuation had already run ahead of near-term operating momentum. Business Today reported that the stock touched ₹5,054.40 as investors reacted to a 14.4% year-on-year rise in execution, even as the brokerage kept its target price unchanged at ₹5,040.

Nuvama said the results showed improving execution, with EBITDA margin expanding 110 basis points to 28.7% as other operating costs eased. Profit after tax rose 15% from a year earlier, helped by stronger other income, which offset a 65% increase in depreciation. The brokerage, however, pointed to a 280 basis point decline in gross margin and said weaker-than-expected product-led execution limited further upside.

The firm said HAL still has a backlog of about ₹2.5 lakh crore, but argued that the next phase of growth depends on faster delivery across key programmes. It flagged the light combat aircraft Tejas, advanced light helicopter and HTT-40 trainer aircraft as the main near-term monitors, alongside progress on Sukhoi work and conversion of a ₹90,000 crore order pipeline. Nuvama said the stock was already trading above its valuation framework, even after assuming 14% revenue growth, 10% earnings growth and 30% EBITDA margins by FY28.

Analysts will now be watching whether HAL can accelerate deliveries in the second half of FY27, especially if supplies from GE arrive on time for Tejas production. The brokerage said sustained margin gains and fresh order wins would be the main triggers for a re-rating, but for now it sees the shares as fairly valued after their sharp rally.