- HAL recorded revenue of ₹30,400 crore (provisional & unaudited) for FY25, compared to ₹30,381 crore in FY24, with supply chain issues affecting delivery timelines
- The company secured a landmark ₹62,700 crore Ministry of Defence contract for 156 Prachand Light Combat Helicopters on March 28, 2025
- Total order inflow for FY25 reached ₹119,500 crore, including manufacturing contracts worth ₹102,000 crore and ROH contracts of ₹17,500 crore
- Order backlog stands at ₹184,000 crore (6x FY25 revenue) as of March 2025, providing healthy revenue growth visibility
- HAL announced a first interim dividend of ₹25 per equity share with face value of ₹5 for FY25
BENGALURU: India’s premier aerospace and defense manufacturer, Hindustan Aeronautics Limited (HAL), continues its growth trajectory despite facing supply chain challenges that impacted its FY25 delivery schedule. The company has positioned itself for substantial future growth through strategic contract wins, manufacturing capacity expansion, and enhanced operational autonomy following its Maharatna status elevation.
HAL (BSE: 541154)
| Price: ₹4,540.30 | 52-week High/Low: ₹5,674.75/₹3,046.05 | Market Cap: ₹3,00,440.48 crore
Financial Performance
HAL recorded flat revenue growth with provisional unaudited revenue of ₹30,400 crore for FY25 compared to ₹30,381 crore in FY24, primarily due to supply chain disruptions affecting Light Combat Aircraft (LCA) Tejas MK1A deliveries and ALH (Advanced Light Helicopter) production delays.
The company’s Q3 FY25 (October-December 2024) results showed a revenue of ₹7,810 crore, up 8% year-on-year, with net profit at ₹1,875 crore, up 15% from the same period last year.
| Financial Parameters (₹ in Crore) | Q3 FY25 | Q3 FY24 | YoY Change (%) | 9M FY25 | 9M FY24 | YoY Change (%) |
|---|---|---|---|---|---|---|
| Revenue from Operations | 6,957 | 6,061 | 14.8% | 17,281 | 15,810 | 9.3% |
| Net Profit | 1,440 | 1,261 | 14.2% | 4,359 | 3,718 | 17.2% |
| EBITDA | 2,450 | 1,885 | 30.0% | 5,740 | 4,977 | 15.3% |
| EBITDA Margin (%) | 31.0% | 30.0% | 1.0% | 30.2% | 29.1% | 1.1% |
Note: Q3 FY25 and 9M FY25 figures compiled from company reports; some figures are approximate.
Five Key Developments Driving HAL’s Growth Trajectory
1. Landmark Order Acquisitions
HAL secured a landmark ₹62,700 crore contract from the Ministry of Defence for 156 Prachand Light Combat Helicopters on March 28, 2025, including 66 for the Indian Air Force and 90 for the Indian Army. This contract represents one of the largest indigenous defense deals and reinforces HAL’s position as the premier rotary-wing manufacturer in India.
For the full year FY25, HAL secured total orders of ₹119,500 crore, including manufacturing contracts worth ₹102,000 crore and repair and overhaul (ROH) contracts of ₹17,500 crore.
2. Robust Order Pipeline and Backlog
HAL’s order backlog stands at an impressive ₹184,000 crore (6 times FY25 revenue) as of March 2025, providing healthy revenue growth visibility for the coming years.
The company’s order pipeline remains robust with anticipated contracts for additional 97 Tejas Mk1A aircraft (expected order value of approximately ₹65,000 crore) and Sukhoi upgrades expected to be placed soon.
3. Manufacturing Capacity Expansion
HAL has been expanding its manufacturing capabilities across aircraft, helicopters, and aero-engines, which is expected to significantly improve execution capability in the coming period once supply chain issues stabilize.
The company has set up new production facilities in Karnataka (Tumakuru) to expand its capacity for defense helicopters and other products, funded entirely through internal accruals, which will support the execution of the recent large helicopter orders.
4. Strategic Maharatna Status
HAL was granted prestigious Maharatna status in October 2024, providing the company with enhanced operational and financial autonomy to make strategic decisions. This status upgrade allows HAL greater flexibility in investment decisions, capital expenditure, and forming joint ventures and subsidiaries, enabling more agile responses to market opportunities.
5. Indigenous Development Programs
The company is progressing on multiple indigenous development programs including Tejas MK1A, with deliveries expected to accelerate after resolving ongoing engine supply challenges. HAL’s focus on indigenous aircraft development programs like the Tejas MK2 (expected first flight in 2025) and Twin Engine Deck Based Fighter (TEDBF) positions it for continued long-term growth.
Financial Risk Profile
CARE Ratings reaffirmed HAL’s credit rating at “CARE AAA; Stable / CARE A1+” for its long-term and short-term bank facilities in April 2025, indicating the highest level of safety regarding timely servicing of financial obligations.
HAL maintains a strong liquidity position with free cash and cash equivalents of approximately ₹25,307 crore as of December 31, 2024. The company operates with negligible debt levels, with an almost debt-free status and minimal utilization of working capital limits.
“HAL continues to benefit from its strategic importance to the Indian defence forces, resulting in maintaining its leadership position in the Indian Aerospace and Defence industry supported by long track record of operations, high entry barriers and maintaining its highly comfortable financial risk profile,” notes CARE Ratings in its assessment.
Outlook and Future Prospects
HAL’s future execution trajectory looks promising as supply chain issues stabilize and manufacturing capacity expansions come online. The timely placement of the LCH contract, set to be executed by FY30, provides medium-term revenue visibility.
Analysts project a 12-month target price of ₹4,750-5,000, with potential to reach ₹6,000 if orders execute smoothly, according to ICICI Securities.
The company’s margins are expected to remain healthy due to its strong repair and overhaul (ROH) business segment, which typically generates higher margins than manufacturing activities.
Challenges and Risk Factors
Despite its strong positioning, HAL faces several key challenges:
- Supply Chain Disruptions: The company experienced delivery shortfalls in LCA Tejas MK1A due to unavailability of engines and ALH production delays following an accident in January 2025 and subsequent fleet grounding.
- Execution Delays: HAL faces execution risks, including aluminum shortages potentially delaying 10-11 Tejas Mk1A deliveries scheduled for FY26.
- High Dependence on Government Orders: The company remains heavily dependent on Ministry of Defence contracts and annual budget allocations.
- Increasing Private Sector Competition: Relaxation in foreign direct investment guidelines and government thrust on private sector participation in defense production could increase competitive pressure in the medium to long term.
About Hindustan Aeronautics Limited
HAL is a Maharatna Central Public Sector Enterprise (CPSE) under the Ministry of Defence, Government of India. Founded in 1963 (with roots tracing back to 1940), HAL specializes in design, development, manufacture, repair, overhaul, and servicing of aircraft, helicopters, aero-engines, avionics, and aerospace structures.
The Government of India holds a majority stake of 71.6% in the company. The company operates 20 production/overhaul divisions and 11 R&D centers across India, with major facilities in Bengaluru, Nashik, Koraput, and Lucknow.
Key Takeaways for Investors
- Strong Order Visibility: HAL’s order backlog of ₹184,000 crore (6x FY25 revenue) provides clear revenue visibility for the next 5-6 years.
- Margin Resilience: Despite flat revenue growth in FY25, the company has maintained strong EBITDA margins around 30%, demonstrating operational efficiency.
- Dividend Continuity: HAL announced a first interim dividend of ₹25 per equity share for FY25, maintaining its track record of healthy shareholder returns.
- Growth Catalysts: Resolution of supply chain issues and capacity expansion across aircraft, helicopters, and aero-engines is expected to accelerate execution in coming quarters.
- Indigenous Focus: HAL’s leading role in India’s defense self-reliance initiative positions it to benefit from continued government support and preference for domestic procurement.
Footnotes:
^1 LCA: Light Combat Aircraft, India’s indigenous fighter jet program with the Tejas MK1A as its latest operational variant.
^2 ALH: Advanced Light Helicopter, a multi-role, multi-mission helicopter designed and manufactured by HAL.
^3 LCH: Light Combat Helicopter, an indigenous attack helicopter designed for high-altitude operations.
^4 ROH: Repair and Overhaul services, a high-margin business segment for HAL that includes maintenance of existing aircraft.
^5 Maharatna status: Highest category status given to Central Public Sector Enterprises in India, providing greater financial and operational autonomy.
Disclaimer: I am not a SEBI-registered investment advisor. The information provided in this blog is for educational and informational purposes only and should not be considered as financial advice. Please consult a qualified professional before making any investment decisions.