Comments
Target: ₹2618
CMP: ₹1,603.85
Hindustan Aeronautics’ (HAL) FY22 reported print was above expected both of top line as well as profitability with revenue growth of 8 per cent y-o-y (higher than the provisional revenues disclosed earlier) and PBT increasing 22 per cent y-o-y.
Even adjusted for higher other income due to tax refund of earlier years PBT increased by 16 per cent y-o-y, despite about 150 per cent increase in provisions. Higher provisions helped to normalise what otherwise would have been 27 per cent+ EBITDA margins for FY22.
Ideally these would clearly lead to increase in expected margins for FY23/24, for sake of prudence we await management call before increasing our margin assumptions. Working capital has improved significantly for HAL allowing over ₹8,500 crore of FCF in FY22; receivable days dropped to 69 (227 days in FY19).
We maintain Buy with a DCF target price of ₹2,618/share. HAL remains on the strategic DPSU and (in our view) can potentially garner about 50 per cent of Indian defence order inflow (i.e ₹2.5-lakh crore) over next 5 years. The stock remains inexpensive.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.