Defence PSU Stock Gave 465% Return In 3 Yrs, Trading Near 52 Week High, Buy, Says ICICI Direct

ICICI Direct has picked Hindustan Aeronautics Limited (HAL) with a Buy recommendation for a target price of Rs. 3,610/share. The stock is likely to give a decent return of 17% considering the given target price and the current market price. HAL is a Navratna-status PSU stock operating in the defence sector. It is a large-cap company with a market capitalisation of Rs. 1,03,456 crore.

Q4FY23 Result

According to ICICI Direct, "EBITDA margin improves on better contract mix. Revenue increased 8.1% YoY to Rs. 12494.7 crore. Sequentially, revenue increased 120.5% as Q4 remains better in terms of execution. The EBITDA margin improved 435 bps YoY to 26.0% on better contract mix; leading to EBITDA growth of 29.8% YoY to Rs. 3245.8 crore. PAT declined 8.8% YoY to Rs. 2831.2 crore due to higher depreciation."

ICICI Direct, "We expect HAL to deliver revenue and EBITDA CAGR of 10.8% and 10%, respectively, over FY23-25E. PAT is likely to grow at 6.5% CAGR (FY23-25E). Increase in profitability with strong asset turnover is expected to result in healthy return ratios over FY23-25E. We continue to remain positive and retain our BUY rating on the stock. We value HAL at Rs. 3610 i.e. 22x PE on FY25E EPS."

Stock Outlook

The stock last traded at Rs. 3,093.90/share, down 1.28% from the previous close of Rs. 3,133.90/share. The stock recorded its 52 week high on 17 May 2023 at Rs. 3,168.80/share, and 52 week low on 17 May 2022 at Rs. 1,612.05/share.

It jumped 2.5% in the past 1 week, and 9.36% in the past 1 month, respectively. It gave 84.05% positive return in 1 year. In 3 years, it has given 465.1% positive return. It has given 199.55% positive return in 5 years.

About - Hindustan Aeronautics Ltd. (HAL)

Hindustan Aeronautics (HAL), the largest defence PSU in India, is engaged in design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. The company has delivered revenue, EBITDA and PAT CAGR of 7.9%, 10.9% and 19%, respectively, in FY20-23. In FY23, repair & overhaul contributed ~70% to total revenues while manufacturing contributed~18%.

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. 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 consult with certified experts before making any investment decision.