Defence Company Bags 12 Su-30 MKI Aircraft Order Worth Rs 13,500 Crore from Ministry of Defence

The stock gave multibagger returns of 250 per cent in 2 years and a whopping 1,130 per cent in 5 years.

In a significant stride towards India's self-reliance initiative, the Ministry of Defence (MOD) has inked a contract with Maharatna Aerospace & Defence PSU Company - Hindustan Aeronautics Limited (HAL) for the procurement of 12 Su-30MKI fighter aircraft and associated equipment. This strategic move, valued at approximately Rs. 13,500 crore, inclusive of taxes and duties, is a testament to India's commitment to bolstering its defence capabilities.  

The indigenous content of these aircraft is set at an impressive 62.6%, a figure that is poised to increase further as various components are indigenized and manufactured by the Indian defence industry. This localization effort will not only enhance the domestic manufacturing ecosystem but also reduce reliance on foreign suppliers. The Su-30MKI aircraft, renowned for its advanced capabilities, will be produced at HAL's Nasik division. Their induction into the Indian Air Force will undoubtedly augment the service's operational prowess and contribute to strengthening India's overall defence preparedness.  

Earlier, the company 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.

About the Company

Hindustan Aeronautics Limited (HAL) is a one-stop shop for India's defence aviation needs, specialising 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 maintained a healthy dividend payout of 30 per cent.

According to Quarterly Results, the net sales increased by 6.1 per cent to Rs 5,679.29 crore and net profit increased by 21.6 per cent to Rs 1,498.46 crore in Q2FY25 compared to Q2FY24. In its half-yearly results, the net sales increased by 8.1 per cent to Rs 10,323.79 crore and net profit increased by 43.4 per cent to Rs 2,929.57 crore in H1FY25 compared to H1FY24.

The company's order book of over Rs 1,00,000 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 250 per cent in 2 years and a whopping 1,130 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.