Rs 22,30,00,00,00,000 acquisition proposal from Ministry of Defence: Heavy buying in this multibagger aerospace & defence stock on mega orders; scrip hit 52-week high!

The stock is up by 80 per cent in just 1 year, 280 per cent in 2 years and a whopping 500 per cent in 3 years.

On Friday, shares of Hindustan Aeronautics Ltd (HAL) gained 4.9 per cent to make a new 52-week high of Rs 2,499 per share from its previous closing of Rs 2,382.3. At the closing bell, shares of the company were trading at Rs 2,462.15 per share, up 3.35 per cent with a spurt in volume by more than 2.32 times on BSE.

The Indian Defence Acquisition Council (DAC) has approved crucial capital acquisition proposals worth a staggering Rs 22,30,00,00,00,000, marking a significant step towards self-reliance in the defence sector. Notably, 98 per cent of these acquisitions, amounting to Rs 22,00,00,00,00,000, will be sourced from domestic industries, boosting the 'Aatmanirbharta' initiative.

Key highlights of the plan include:

Army

• Anti-Tank Munitions: Acquisition of two types of Area Denial Munitions (ADM) to neutralize enemy tanks and personnel.
• Towed Gun System (TGS): Replacing outdated Indian Field Guns with state-of-the-art systems.
• 155 mm Nubless Projectile: Enhancing lethality and safety of artillery fire.
• Automatic Target Tracker and Digital Basaltic Computer for T-90 Tanks: Maintaining the combat edge of T-90 tanks.

Navy

• Medium Range Anti-Ship Missiles (MRAShM): Equipping Indian Naval Ships with a new offensive weapon.
• Air Force:
• Light Combat Helicopter (LCH) and Light Combat Aircraft (LCA) Mk 1A: Procurement from Hindustan Aeronautics Limited (HAL).
• Upgradation of Su-30 MKI Aircraft: Indigenous upgrade by HAL.

Boosting Indigenous Capability

• Increased Indigenous Content: A major amendment in the Defence Acquisition Procedure (DAP) 2020 mandates a minimum 50% indigenous content in all procurement cases, excluding AMC/CMC cost.
• Support for Start-ups and MSMEs: Registered MSMEs and recognized start-ups can now participate in procurement cases with AoN cost up to Rs 300 crore without any financial parameter limitations. This limit can be further relaxed on a case-by-case basis for AoN cost up to Rs 500 crore.

This comprehensive plan signifies a giant leap towards achieving self-reliance in the Indian defence sector. The focus on domestic sourcing and increased indigenous content will not only strengthen the armed forces but also boost the Indian defence industry, creating jobs and economic opportunities. The support for start-ups and MSMEs further paves the way for innovation and technological advancement in the sector. This bold initiative promises to make India a major player in the global defence arena.

Earlier, the company ex-date for the stock split stock split, dividing each existing Rs 10 equity share into two Rs 5 equity shares on September 28, 2023. Additionally, the company paid a final dividend of Rs 15 per share on August 24, 2023.

According to the Quarterly Results, the net sales increased by 9.54 per cent to Rs 5,635.7 crore and net profit increased by 1.1 per cent to Rs 1,232.3 crore in Q2FY24 compared to Q2FY23. The net sales increased by 9.37 per cent to Rs 26,927 crore and the net profit increased by 14.25 per cent to Rs 5,828 crore in FY23 compared to FY22. The company has a market cap of Rs 1,64,663 crore and has been maintaining a healthy dividend payout of 29.6 per cent.

The company's order book position is maintained at Rs 81,784 crore with the receipt of fresh manufacturing contracts, ROH and spare orders with continued budget allocation from the customer’s cash and the bank balance position has improved to Rs 20,306 crore.

The stock has a PE of 27.2x, an ROE of 27.2 per cent and an ROCE of 30.6 per cent.  The stock is up by 80 per cent in just 1 year, 280 per cent in 2 years and a whopping 500 per cent in 3 years. Investors should keep an eye on this multibagger Large-Cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.