2:1 stock split & Rs 94,000 crore order book: President of India & LIC-backed multibagger defence stock gained over 5 per cent with heavy volume; Do you own it?

The stock gave multibagger returns of 155 per cent in just 1 year and a whopping 780 per cent in 3 years.

On Wednesday, shares of Hindustan Aeronautics Ltd gained 5.23. per cent to an intraday high of Rs 4,749.60 per share from its previous closing of Rs 4,513.35 per share. At the closing bell, shares of the company were trading at Rs 4,741.60 per share, up 5.06 per cent. The company has not made any significant announcements of late. Hence, the rally in the share price could be driven purely by the market forces. 

Earlier on Friday, HAL announced a significant development in the LCA Tejas Mk-2 fighter jet program by signing an amendment to a Memorandum of Understanding (MoU) with the Aeronautical Development Agency (ADA). This amendment focuses on finalizing the development of the LCA Tejas Mk-2 and achieving operational clearance. The collaboration covers the Full-Scale Engineering Development (FSED) Phase-3 of the program, with a total value of Rs 2,970 crore, which includes a fee of Rs 285 crore for HAL.

Hindustan Aeronautics Limited (HAL) is a one-stop shop for India's defence aviation needs, specializing in the design, manufacture, repair, and maintenance of aircraft, helicopters, and their engines, making them a critical supplier for the country's defence program.

According to its Quarterly Results, the net sales increased by 18.2 per cent to Rs 14,768.8 crore, operating profit increased by 62.8 per cent to Rs 6,458.6 crore and net profit increased by 51.1 per cent to Rs 4,296.9 crore in Q4FY24 compared to Q4FY23.  In its annual results, the net sales increased by 12.8 per cent to Rs 30,381.1 crore, operating profit increased by 39.4 per cent to Rs 11,637.7 crore and net profit increased by 30.4 per cent to Rs 7,594.5 crore in FY24 compared to FY23. 

Additionally, the shares of the company ex-traded 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. 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 3.17 lakh crore and has been maintaining a healthy dividend payout of 30 per cent.

The company has an order book of Rs 94,000 crore as of March 31, 2024. The stock has a PE of 41x, an ROE of 29 per cent and an ROCE of 39 per cent. The stock gave multibagger returns of 155 per cent in just 1 year and a whopping 780 per cent in 3 years. Investors should keep an eye on this multibagger aerospace & defence stock.

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

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