Multibagger Defence Stock in Focus as DAC Approves 05 Capital Acquisition Proposals Worth Rs 21,772 Crore to Augment Defence Preparedness
The stock gave multibagger returns of 230 per cent in 2 years and a whopping 1,075 per cent in 5 years.
The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, gave the green light to five crucial capital acquisition proposals worth over Rs. 21,772 Crores on December 3, 2024. These approvals aim to bolster India's defence capabilities and preparedness. The procurement includes Water Jet Fast Attack Crafts, Fast Interceptor Craft, Electronic Warfare Suite (EWS), Next Generation Radar Warning Receiver, and Advanced Light Helicopters for enhanced surveillance in coastal regions. This strategic investment underscores India's commitment to modernizing its armed forces and safeguarding its maritime interests.
DAC granted Acceptance of Necessity (AoN) for the procurement of 31 New Water Jet Fast Attack Crafts (NWJFACs) for the Indian Navy. These are designed to perform the task of Low-Intensity Maritime Operations, Surveillance, Patrol, and Search and Rescue (SAR) operations close to the coast. In addition, these vessels will play an effective role in Anti-Piracy missions, especially in and around our Island territories. DAC also accorded AoN for the procurement of 120 Fast Interceptor Crafts (FIC-1). These vessels are capable of performing multiple roles, including escorting High-Value Units such as Aircraft Carriers, Destroyers, and Frigates, Submarines for coastal defence.
AoN for procurement of Electronic Warfare Suite (EWS) comprising External Airborne Self Protection Jammer pods, Next Generation Radar Warning Receiver and associated equipment for Su-30 MKI Aircraft was accorded by DAC. This system will enhance the operational capabilities of SU-30 MKI and protect it from enemy radars and related weapon systems while carrying out a mission against enemy targets protected by Air Defence systems. DAC accorded AoN for procurement of 06 Advanced Light Helicopters (ALH) M (MR) for the Indian Coast Guard to strengthen the Coastal Security and Surveillance in the coastal areas. It has also accorded approval for the overhaul of T-72 & T-90 tanks, BMP- and engines of Sukhoi fighter aircraft which will enhance the service life of these assets.
On Wednesday, shares of Hindustan Aeronautics Ltd gained 2.42 per cent to Rs 4,626.30 per share from its previous closing of Rs 4,516.80 per share. The stock’s 52-week high is Rs 5,675 and its 52-week low is Rs 2,504.20.
Maharatna Aerospace & Defence PSU Company - Hindustan Aeronautics Ltd. (HAL) shares surged on the news of the Defence Acquisition Council's approval for the procurement of six Advanced Light Helicopters (ALH). This positive development aligns with the government's push for indigenous defence manufacturing and is expected to boost HAL's order book and revenue prospects. The company's stock price experienced a significant jump following the announcement.
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About the Company
Hindustan Aeronautics Limited (HAL) is a one-stop shop for India's defence aviation needs, specializing in designing, manufacturing, repairing, and maintaining aircraft, helicopters and engines, making them a critical supplier for the country's defence program. The President of India’s portfolio owns the majority of the stake i.e., 71.64 per cent as of June 2024. The company has a market cap of Rs 3 lakh crore and has been maintaining a healthy dividend payout of 30 per cent.
Hindustan Aeronautics Limited (HAL) has secured significant contracts worth Rs 26,000 crore from the Ministry of Defence (MoD). These contracts include the avionics upgrade of Dornier-228 aircraft and the manufacturing of 240 AL-31FP engines for Su-30MKI fighter jets, boosting India's defence capabilities and aligning with the "Atmanirbhar Bharat" initiative.
The company's order book as of March 31, 2024, was Rs 94,000 crore. With the addition of a new order worth Rs 26,000 crore, the total order book now stands at Rs 1,20,000 crore. The stock has a PE of 33x, an ROE of 29 per cent and an ROCE of 39 per cent. The stock gave multibagger returns of 230 per cent in 2 years and a whopping 1,075 per cent in 5 years. Investors should keep an eye on this multibagger aerospace & defence stock.
Disclaimer: The article is for informational purposes only and not investment advice.