Hindustan Aeronautics Ltd (HAL) was in the spotlight on Wednesday as the government approved a ₹62,000 crore deal for 97 Tejas Mark 1A jets for the Indian Air Force. The green light, given at a top-level meeting, allows HAL to move forward with production, according to defence sources.
India approved a second major deal for LCA Tejas Mark 1A jets, adding to the initial order of 83 units worth ₹48,000 crore. This increases the IAF’s total to 180 jets, showing ongoing investment in domestically developed defense technology.
In a note dated August 13, Choice Institutional Equities highlighted that HAL has finished assembling 19 Tejas Mk1A jets, 11 single-seat and 9 trainer versions. Despite this progress, limited engine availability continues to be the main production challenge.
So far, only two GE engines have arrived, with 10 more expected by December 2025. Despite trade tensions between India and the US, deliveries are likely to continue as these engines face no export restrictions. The brokerage is optimistic about HAL’s medium-term growth, citing Tejas Mk1A deliveries as key. After a recent dip, it upgraded its rating to BUY from ADD with a target of ₹5,570, valuing the stock at 35x FY27/28 earnings.
PL Capital projects HAL will soon deliver the first LCA Tejas Mk1A to the IAF, having received its second GE F-404 engine, with 10 more expected this year. The proposed purchase of 97 additional jets boosts HAL’s long-term revenue prospects, the brokerage said.
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The SSLV deal with ISRO signals HAL’s move into space tech, broadening its business and growth potential. Trading at a P/E of 34.8x/32.1x for FY26/27E, the stock is upgraded to ‘Buy’ from ‘Accumulate’ after a recent dip, with a target price of ₹5,500 based on a 40x Mar’27E P/E.
