Target: ₹2,618

CMP: ₹1,370.60

Hindustan Aeronautics (HAL) procures ₹4,000-4,200 crore worth of spares and parts (used in ROH) from Russia, for which it has maintained inventory to cater to the requirement for at least next 8-9 months. The company is also focusing on indigenous production of Russian supplies to reduce the import dependence.

Management mentioned that Russia has confirmed to supply critical raw material to the company, but the payment mechanism is yet to be established (G2G discussions on). Management has provided revenue growth guidance of about 6 per cent y-o-y for FY22 and expects to maintain 24-25 per cent EBITDA margin.

Also, management mentioned that Russia has confirmed to supply critical raw material to the company, but the payment mechanism is yet to be established. Previously, payments were made through PSU banks (Uco bank and Syndicate Bank in India and Sber Bank in Russia). Discussions are ongoing with the RBI and PSU banks to pay for defence purchases.

The current outstanding order book position is about ₹79,230 crore as at end-Dec’21 and following platforms for which AoN has been granted by the MoD and are expected to strengthen the order book by ₹30,000 crore: the proposed order includes 70 HTT-40, 12 Su-30s, 25 ALH for Indian Army, 12 LUH for Indian Army and Indian Air Force and Mid-life upgrade of Do-228 for Indian Navy.

The order should have delivery timeline of six years for AL-31, starting 24 months from the date of the order.

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