Hindustan Aeronautics touches all-time high price

Amidst all the volatility in the stock markets, the stock of Hindustan Aeronautics (HAL) managed to hit a record high of Rs.1,592 on the BSE. The stock gained a lot of heft and momentum after the company recorded its highest ever sales revenues of over Rs.24,000 crores for the financial year ended March 2022.

This is 6% higher than the sales recorded by HAL in the previous year and came on the back of robust order flows from armed forces.

Just a quick word on the Russian war and the anticipated impact on the numbers of HAL. When the war between Russia and Ukraine started, there was a fear that the stock of HAL would get negatively impacted due to the huge dependence that HAL had on imports of spares and equipment from Russia.
 

However, that has hardly been a major issue for HAL as the company runs with inventories of 8-9 months and supplies are hardly an issue.

Year FY22 was all about a slew of fresh orders coming for Hal. The all-time high revenues reported by HAL in FY22 was led by the production of 44 new helicopters, 84 new engines, as well as the overhauling of 203 helicopters and 478 engines.

In addition, HAL also bagged a contract to produce 15 Light Combat Helicopters (LCH) worth Rs.3,887 crore. Of these, 10 will be for the Indian Air Force while 5 will be for the Indian Army.

There is also a rating boost that has come the way of Hindustan Aeronautics Ltd. During the year, the two credit rating agencies viz. CARE Ratings and ICRA upgraded the credit rating classification of the debt paper of HAL from AA+ Stable to AAA/Stable.

This upgraded was backed by improved financial performance and a much better cash flow position. This is likely to bring down the cost of funds for the borrowings of HAL, going ahead.

HAL is a blue chip Indian PSU engaged in the aerospace segment. It is engaged in the design, development, manufacture, repair, overhaul and servicing of a wide range of aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.

It was conceived and established to meet the growing needs of the Indian Defence Forces in the area of Aerospace. HAL has also benefited substantially from the Make in India initiative.

As of 05-April, the stock of HAL is trading at Rs.1,562. It has scaled a 52-week high of Rs.1,592 and a 52-week low of Rs.925 during the last one year.

The company current trades at a P/E ratio of 14.5 times rolling four quarter earnings, which is reasonable with ROE at 21.9%. HAL has a total market cap of Rs.52,220 crore with free float market capitalization of Rs.13,058 crore.