Why Is Nomura Still Bullish On HAL’s Defence Growth Story?
About Nomura’s Latest View On HAL
Nomura has maintained its “Buy” recommendation on Hindustan Aeronautics Limited (HAL) and slightly increased its target price to ₹6,040 from ₹5,954. The brokerage continues to consider HAL its top defence-sector pick because of strong order visibility, improving execution, and long-term manufacturing opportunities.
The brokerage highlighted that HAL’s manufacturing order-book strength and execution capability continue to remain underappreciated by the market.
Nomura believes HAL’s revenue visibility remains robust because of its extremely strong manufacturing order-book-to-bill ratio of nearly 25x, which provides multi-year earnings support.
Key Nomura Highlights On HAL
🔹 Nomura maintained “Buy” rating on HAL.
🔹 Target price increased to ₹6,040.
🔹 HAL remains Nomura’s top defence-sector pick.
🔹 Manufacturing order-book-to-bill ratio stands at 25x.
🔹 FY27 revenue guidance seen as conservative.
🔹 LCA deliveries expected to become major catalyst.
Defence-sector traders and investors tracking aerospace and military-manufacturing opportunities can also monitor Nifty Scalping Tip developments alongside defence-sector momentum.
HAL Growth & Valuation Snapshot
| Parameter | Observation |
|---|---|
| Brokerage | Nomura |
| Recommendation | Buy |
| Target Price | ₹6,040 |
| Manufacturing Book/Bill Ratio | 25x |
| Expected FY26-29 EPS CAGR | 19% |
| Expected EBITDA CAGR | 20% |
Nomura also highlighted that HAL’s FY27 revenue guidance of 10–12% appears conservative while EBITDA margins are expected to remain strong in the 30–31% range.
Strengths & Weaknesses
|
Strengths 🔹 Massive defence-order visibility supports growth 🔹 Strong EBITDA margins enhance profitability 🔹 LCA program offers long-term catalyst potential 🔹 Strong execution capability highlighted by Nomura |
Weaknesses 🔹 LCA deliveries slower than earlier expectations 🔹 Dependence on government defence spending 🔹 Execution delays may affect revenue timing 🔹 High expectations already reflected partly in valuations |
Although Nomura reduced FY27 and FY28 EPS estimates by 2–3% because of slower-than-expected Light Combat Aircraft (LCA) deliveries, the brokerage still expects strong long-term earnings growth.
Opportunities & Threats
|
Opportunities 🔹 Defence indigenisation trend remains strong 🔹 Large manufacturing order pipeline supports visibility 🔹 LCA deliveries may accelerate future growth 🔹 Export opportunities may expand over time |
Threats 🔹 Delays in aircraft delivery schedules remain risk 🔹 Budgetary changes can affect defence allocations 🔹 Supply-chain disruptions may impact manufacturing 🔹 Execution bottlenecks may affect earnings timing |
HAL continues benefiting from India’s defence-indigenisation strategy, expanding military-modernisation plans, and growing aerospace-manufacturing requirements.
Valuation & Investment View
Nomura’s positive stance on HAL reflects confidence in the company’s long-term manufacturing visibility, strong profitability profile, and defence-sector leadership. Investors may continue monitoring LCA delivery schedules, defence-order inflows, government spending trends, and execution efficiency while evaluating the stock.
Many active traders also monitor BankNifty Scalping Tip positioning to evaluate broader institutional sentiment during defence-sector rallies.
Investor Takeaway: Derivative Pro & Nifty Expert Gulshan Khera, CFP® believes defence-manufacturing companies with strong order visibility, execution capability, and long-term government policy support may continue attracting institutional interest over the coming years. However, investors should continue monitoring delivery timelines, valuation sensitivity, and policy developments carefully. Readers can continue following broader market insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on HAL and Defence Stocks
Why Is Nomura Bullish On HAL?
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Why Is HAL A Top Defence-Sector Pick?
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What Drives Long-Term Growth In Defence Stocks?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
