1:2 Split: Defence PSU Likely To Offer Rich Returns, Jefferies Recommends Buy; TP Rs 5725

Brokerage firm Jefferies has picked large cap public sector undertaking (PSU) from defence & aerospace sector, Hindustan Aeronautics Ltd share and recommended buy call with target price of Rs 5725 per share. Current market price of Hindustan Aeronautics share on BSE is Rs 5200.15 per share with intraday gain of 1.90%. HAL shares already offered eye-catching returns to investors in last few months and years. In last 1-month only, HAL share zoomed 28% and gained a whopping 180% in last 1-year. The company has a market capitalisation of Rs 3,48,097.39 crore. HAL carried out one stock split in its history in the ratio of 1:2 and shares traded ex-split as on September 28, 2023.

FII/FPI have decreased holdings from 12.93% to 12.42% in March 2024 quarter. Number of FII/FPI investors increased from 711 to 769 in March 2024 quarter. Mutual Funds have increased holdings from 6.69% to 6.75% in March 2024 quarter. Life Insurance Corporation Of India has 1.89% stake in HAL with 12,628,239 shares of the company. More details below:

Jefferies Recommends Hindustan Aeronautics Ltd Shares To Buy: As per the latest report of the leading global brokerage firm, "We expect HAL to continue double-digit growth for 3-5 years as the sentiment around defence indigenisation and exports remain upbeat. HAL is in a sweet spot as the business has high technology entry barriers."

Jefferies said that the current valuations do not fully reflect HAL's high entry barriers and near-monopoly status. Not only Jefferies but Elara Securities too appears upbeat on HAL and assigned buy call with target price of Rs 5590 per share. The brokerage firm said, "We expect an earnings CAGR of 17 percent during FY24-26E with RoE of 24 percent during FY25-26E. Our target price is driven by rising share of indigenisation from new stream of the exports business, surge in inflows of Rs 1.6 lakh crore, rising margin, and sustained double-digit earnings growth."

Hindustan Aeronautics Share Performance: The 52-week high share price of Hindustan Aeronautics share on BSE is Rs 5,434.90 per share (as on 03/06/2024) and 52-week low price is Rs 1767.95 per share (as on 26/10/2023). Hindustan Aeronautics shares offered rich returns of 84% year-to-date, soared 453% in last 2-years, and offered eye-popping returns of 890% in last 3-years. In last 5-years, the stock offered unbelievably high returns of 1418%.

HAL Q4: HAL declared a growth in Q4 net profit on May 16 amid rising demand for its aircraft from defence ministry.HAL announced a gain of 52% year-on-year (YoY) in its net profit to Rs 4309 crore for the quarter ended March 31, 2024. HAL bagged orders worth Rs 17,600 during the quarter, up 135% from an year ago. The company's revenue from operations rallied 18% YoY to Rs 14,769 crore in Q4 as against Rs 12,494 crore in the corresponding quarter of last year. For the entire year, the defence PSU's consolidated net profit rose 31% to Rs 7621 crore as against Rs 5,828 crore declared in FY 2023. Revenue from operations during the year soared nearly 13% to Rs 30,381 crore as against Rs 26,927 crore a year ago.

It announced margin at 40% for March quarter as against 26% margin for the similar quarter of last year. EBITDA for the March quarter surged by 81.8% to Rs 5,901.1 crore as against the last year's EBITDA of Rs 3245.8 crore.

HAL Dividend History: HAL declared 11 dividends since March 28, 2019. In last 1-year, HAL announced an equity dividend amounting to Rs 37.00 per share. At the current share price of Rs 5200.15, Hindustan Aeronautics Ltd share offers a dividend yield of 0.71%. Adjusting for Bonus/Splits the dividend yield is 0.56%.

HAL Stock Split: HAL conducted stock split of its share once since September 28, 2023. HAL last split face value of its shares from Rs 10 to Rs 5 in 2023 and traded ex-split as on September 28, 2023.

HAL About: Hindustan Aeronautics Ltd (HAL) is an aerospace and defense company, owned by the government of India. The company develops, designs, manufactures, and supplies aircraft, helicopters, avionics, and communications equipment for military and civil markets, among others.

Disclaimer:

The stock has been picked from the brokerage report of UBS and Jefferies. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.